Toyota Innova, Kia Carens to get price hike? GST Council adds 22% cess on MPVs

Buying an MPV with a powerful engine in India is set to get a more costlier affair after the Goods and Services Tax (GST) Council redefined which vehicles will fall under the utility vehicle segment. Until now, SUVs used to attract the highest GST rates of 28 per cent. The council has now said uniform GST rate will be applied on all multi utility vehicles which fall in the same category specified by it and an additional cess.

The GST Council, headed by Finance Minister Nirmala Sitharaman, met on Tuesday, July 11, to discuss the matter with finance ministers from various states. The council decided that irrespective of what name a manufacturer decides to call vehicles in this category, will be included in the utility vehicle segment. Besides the GST, these vehicles will now also attract 22 per cent cess.

The cess will be charged on such vehicles on top of 28 per cent GST. According to the council, all vehicles with length of more than 4,000 mm, engine capacity of more than 1,500 cc and ground clearance of more than 170 mm will attract similar tax.

Currently, vehicles attract this additional cess which ranges between a nominal one per cent to 22 per cent depending on the type of vehicle. Reacting to the development, Shashank Srivastava, Senior Executive Officer (Marketing and Sales) at Maruti Suzuki India, said that the decision clarifies the definition of vehicles attracting highest cess, especially with the ground clearance parameter included. "From the various media reports, it appears that the peak cess of 22 per cent over the 28 per cent GST slab is now applicable for all vehicles fulfilling the three conditions of - more than 4 m length, more than 1,500 cc engine and unladen ground clearance more than 170 mm," said Srivastava.

Watch: Maruti Suzuki Invicto MPV: First Drive Review

Srivastava also said the price hike is unlikely to impact Maruti Suzuki as it has only the Invicto MPV, launched recently, which will fall under the category. However, since Invicto is hybrid-only model, it is likely to escape the 22 per cent cess. Other manufacturers have not officially responded to the development. MPVs like Toyota Innova Crysta and HyCross, Kia Carens and other MPVs are expected to be impacted by the decision. All carmakers are expected to pass on the extra tax burden on the buyers which will increase the ex-showroom price of these vehicles in coming days.

(With input from agencies)