CHENNAI: Clearing the air around the hike in cess on mid-size cars, SUVs and luxury cars, the GST Council raised the cess on large luxury cars to 20 percent, SUVs to 22 percent and mid-size sedans to 17 percent from 15 percent for each of these categories, raising prospects of some types of premium vehicles getting dearer ahead of the festive season. The Council, which met in Hyderabad on Saturday, has however maintained the status quo on the categories like small cars, 13-seater, and hybrid vehicles, that means the effective tax remains the same.
Reacting to the increase in cess, luxury automobile makers have expressed disappointment, saying that the council has completely overlooked their contribution to the industry and the economy. “Even if the rumored cess hike of 10 per cent was not concluded, the prices will go up again, which is disappointing. We will need to study the impact of this hike on the buyer sentiment,” Audi India Head Rahil Ansari said.
Expressing similar views, Mercedes-Benz India MD & CEO, Roland Folger said, “the decision to increase cess totally overlooks the contribution we make to the industry and to the economy”. Though luxury car contribution to the industry volume-wise is very low, the value-wise contribution is much higher and has immense potential to grow, even more, had there been fair taxation, Folger added.
He also pointed out that by continuous taxation of the segment, “the overall revenue generation is going to be hurt, as the increase in price is going to hurt demand.” Folger went on to add that now, prices are bound to leap back to the pre-GST regime. Meanwhile, Jaguar Land Rover India president and managing director Rohit Suri said, “while the increase in cess will impact consumer demand, investment, and job creation, we are glad that the government and GST Council took note of our concerns and somewhat moderated the increase in cess”.
Protests mar council meeting as glitches vex industry
The GST Council meeting witnessed protests from several sections of the industry, who made use of the occasion to highlight their disappointment on the new tax structure. The Federation of Telangana and Andhra Pradesh Chambers of Commerce (FTAPCCI), Agriculture Machines Manufacturers Association, granites manufacturers and others arrived at the GST Council meeting venue on Saturday to highlight the problems being faced by them post GST and tried to get an appointment with Finance Minister Arun Jaitley, even as workers from Left Parties staged protest outside venue.
“Traders are ready to pay the tax amount, but are facing severe problems while filing the returns. Government should immediately address the difficulties being faced because of GSTN. Government has put the lakh of businesses and traders into difficulties with half cooked system,” said Gowra Srinivas, president of Federation of Telangana and Andhra Pradesh Chambers of Commerce. The GSTN portal is the IT backbone of the new tax system, and glitches experienced by taxpayers while filing returns has resulted in a lot of inconvenience, according to industry players, due to the inability of the portal to sustain heavy traffic.