On Saturday, The various automobile manufacturers have written a letter to the Indian government against the proposal to increase tax on luxury cars and sports utility vehicles to 25%. Currently the tax is 15 %.
The letter encloses matter that all the car manufacturers will have to bear increase in tax burden by 5-10 percent in India due to the hike in cess by 10 per cent. There would be a huge difference between the tax before and after GST tax rates were in force.
The car manufacturers have written that hiking cess on these cars will defeat the idea of GST by building a inequality in tax rates for different kinds of cars as GST was enforced to impose a single rate of tax across the board.
Here is the list of few manufacturers that will take a hit if the cess hike goes through. Mercedes Benz, BMW, Audi, Toyota, and Volkswagen are few, while there are some smaller car manufacturers in addition to these companies. Maruti Suzuki and Honda are among the smaller car manufacturers that will also take hits on sedans like Ciaz and City.
Luxury carmakers celebrated the fact that SUVs and luxury cars had become cheaper across the board, when GST was initially rolled out.
But later on, when the government proposed to increase cess on such luxury cars, made the news. The senior executive of Mercedes Benz said that it was one step forward and two steps back.
This move of government has disappointed many car manufacturers, who were actually waiting for cheaper prices. Vice Chairman of Toyota Kirloskar Motor and Whole Time Director of Shekar Viswanathan said that indirectly, the message we get from this move is that government is not looking at the auto sector to spur economic growth.
Shekhar Viswanathan went on saying that hiking cess on large cars and SUVs will put every one at a disadvantage, while few companies may avail selective benefits.