Mercedes Benz slams hike in cess

  • Mercedes Benz slams hike in cess

Mercedes Benz slams hike in cess

The total tax incidence (GST + cess) on mid and large sized cars after new cess rates has increased by 0.5% if compared to the pre-GST rates, while the same for the utility vehicle is down by 1.5%.

Toyota has increased the price of Innova Crysta by around Rs78,000.

The cess on small, electric and hybrid cars and their rates will remain unchanged. Against this, post-GST, the total tax incidence came to 43 per cent. Total tax incidence on SUVs goes up to 50% with a 7% increase in cess (28% gst+22% cess). This will be be added to the 15% cess charged on such vehicles over and above the GST of 28%.

"The GST Council hiked cesses on larger cars/UVs by 2-7 per cent. M&M, which has a number of larger UVs in its portfolio, is likely to be the most impacted", the investment bank said in a statement. For example, small petrol cars which do not exceed 4 metres in length used to be levied 31.4% tax before implementation of GST.

"Following the ordinance on GST amendment, we have to revise the price of our products in line with the cess hike which may almost reflect the prices in the pre-GST scenario", TKM Director and Senior VP Marketing and Sales N Raja said.

The Society of Indian Automobile Manufacturers (SIAM) has expressed relief that a GST Cess of 25% has not been imposed across the board on all larger cars as was the apprehension. As the tax rates fixed under the GST, which came into effect from July 1, were lower than the combined central and state taxes in pre-GST days, the auto prices had dropped by up to Rs 3 lakh. The items include the daily used items like idli/dosa batter, raincoat, brooms, corduroy fabric, computer monitors up to 20 inches, cotton quilts, rubber bands and kitchen gas lighters are expected to cost less now under the GST regime after the lowering of rates by the GST Council. "Even though we had a headspace of hiking cess by 10 per cent, it has been hiked by up to 7 per cent", Jaitley had said.

The government has also recognised the need to encourage hybrid vehicles by creating a differential taxation on hybrid cars, which was one of SIAM's request and this is a welcome step.