MPVs like Kia Carens, Maruti Suzuki Invicto, Toyota Innova Crysta to be hit most by new GST cess slabs

The 50th Goods and Services Tax (GST) Council led by Union Finance Minister Nirmala Sitharaman said that all multi-utility vehicles (MUVs)—including sports utility vehicles (SUVs), MPV (multi-purpose vehicles) and crossover utility vehicles (XUVs)—will have to pay 22 per cent compensation cess over and above the 28 per cent GST rate. The Council has said that no matter what the vehicle is called, as long it meets the set parameters, it will attract the same tax. Sedans will not come under the purview of higher cess.

Sitharaman said the definition of an SUV for levy of cess includes four parameters—it should be popularly known as SUV, should be of the length of 4 meters or above, with an engine capacity of 1,500 cc and above, and unladen ground clearance of a minimum of 170 mm. “We have taken note of the announcement made during yesterday’s GST Council meeting about amendment in Compensation Cess for utility vehicles. We will wait for the notification to understand the details before assessing the impact. At this point, we would like to refrain from commenting further,” said Swapnesh Maru, Executive Vice President and Chief Compliance Officer, Toyota Kirloskar Motor.

Mahindra & Mahindra’s spokesperson said, “We are evaluating details of the changes announced by the GST council on GST rate changes, for certain types of SUVs/ MUVs. The change relates to a recategorisation of GST rate, based on unladen ground clearance, versus current laden ground clearance criterion. We await the official notification related to this change, which should also include the definition of unladen ground clearance and process to measure the same. Once received, we will approach the certification agency for potential recertification of the relevant models, based on the updated definition, if necessary. We are working through SIAM with the appropriate authorities.”

According to Gaurav Vangaal, Associate Director, Light Vehicle Production Forecast, Indian subcontinent at S&P Global Mobility, it will mostly impact the MPV segment more than SUV. “Cars like Kia Carens, Mahindra Marazzo, Toyota Innova Crysta, Toyota Innova Hycross, Mahindra Bolero pickup MUV, etc. are more likely to be impacted by this. As far as the current situation is concerned, there seems to be no impact on SUVs,” he said.