SUVs and MPVs to get costlier as GST cess hiked by 2%

The government has maintained the lower 15% cess rate on hybrid vehicles.

The GST Council met for the 50th time this week to discuss a long-standing loophole that allowed certain models to avoid high compensation cess levied on SUVs. The government has now clarified the definition of UVs, which include SUVs, MUVs and crossovers.

According to the revised definition, 22% cess would be levied on SUVs, MUVs and crossovers with lengths exceeding 4,000 mm, engine capacity exceeding 1,500cc and unladen ground clearance of 170 mm and above.

This means sedans with a ground clearance of 170 mm or more will not come under the higher cess bracket. Sub-4 meter crossovers, midsize SUVs and MPVs with engines smaller than 1,500cc will attract lower compensation cess. The government has also maintained the lower 15% cess rate on hybrid vehicles.

How will this affect vehicle prices?

SUVs and MPVs like the Mahindra XUV700 and Toyota Innova Hycross will get costlier by 2%. However, the hybrid Innova Hycross and the Maruti Invicto would benefit from the lower cess rate, making them more popular in the long run.

Source: TOI