- GST Council has decided to have a criteria for vehicles to be considered as an SUV
- Sub-4 metre or compact SUVs may get more affordable and attract less GST rate with new rules
- New criteria will define which vehicles to be considered as SUVs based on size, engine and other aspects
The Goods and Services Tax (GST) is one of the charges that come with buying a new car. The body style, engine features, and other attributes of the cars all affect the taxes. Whether it's a compact, sub-4-meter SUV or a large, five- or seven-seater SUV, SUVs in India are subject to high GST rates. The GST council has now decided on new criteria for the vehicles to be considered SUVs in India. Under the new rules, the vehicles are to be considered SUVs according to their size, engine, and ground clearance.
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Which Cars Will Be Considered As SUV?
The new cars having a length of over 4,000mm, an engine displacement of over 1,500 cc, and a ground clearance of over 170mm would be classified as SUVs, according to the GST council, which is presided over by Union Finance Minister Ms. Nirmala Sitharaman. The GST statutes define vehicles that meet all of these requirements as SUVs, and these vehicles will be subject to the highest rate of taxation, which is a combined 28 percent GST and 22 percent cess, or nearly 50 percent tax. According to new GST regulations, vehicles that do not fulfill these requirements will be subject to lower rates of cess in addition to the 28% GST.
Chairperson of the Central Board of Indirect Taxes and Customs, Vivek Johri, stated that a lower cess rate will be applied if the cars don't match any of the above requirements. In addition, he said that a panel within the company would determine if mobility utility vehicles also needed to meet these requirements in order to fall under the higher cess threshold.
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Compact & Sub-Compact SUVs Which Will Get The Benefit
The well-known sub-4-meter SUVs, like the Tata Nexon, Kia Sonet, Hyundai Venue, Mahindra XUV300, and Maruti Suzuki Brezza, have engines that are just under 1500cc in capacity and under 4-metre in size. Due to the new regulation, these SUVs will only be subject to a 5% GST.
If we consider compact or mid-size SUVs, they have engines that are just less than 1,500cc but are longer than 4 metres. Examples are the Hyundai Creta, Kia Seltos, Maruti Suzuki Grand Vitara, Toyota Urban Cruiser HyRyder, MG Astor, and more. If a vehicle satisfies all requirements under the new legislation, it will be classified as an SUV. Therefore, these vehicles might eventually be subject to lower GST rates.
Verdict: The new GST regulations will benefit prospective automobile purchasers, and the lower tax rates will draw more buyers to compact SUVs. The new regulations will benefit some additional cars in addition to the ones mentioned in the article.
