GST on SUV cars has now become the most complicated topic in the automobile industry. On Saturday, the Goods and Services Tax Council provided clarification on the definition of SUVs (sports utility vehicles) for the purpose of levying a 22% compensation cess and agreed to come up with guidelines to define MUVs (multi utility vehicles).
At the moment, vehicles that have an engine capacity that is greater than 1500 cc, a length that is greater than 4000 mm, and ground clearance that is greater than 170 mm are subject to a GST that is 28% and a cess that is 22%, which brings the effective tax rate up to 50%. However, different states do not adhere to a unified definition of what constitutes an SUV, which has led to misunderstanding among automobile manufacturers.
Nirmala Sitharaman, the Minister of Finance, stated that in the case of sport utility vehicles (SUVs), it has been clarified that the higher rate of compensation cess of 22 percent is applicable to a motor vehicle that fulfils all four conditions: it is commonly known as an SUV; its engine capacity exceeds 1,500 cc; its length exceeds 4,000 mm; and it has ground clearance of 170 mm or more.
According to the minister, “so this clarification is not a new tax,” and instead “it is more to say what qualifies that item which is under taxes as SUV.”
Nirmala Sitharaman, Minister of Finance, stated that the conversation on multi-purpose utility vehicles (MUVs) began after several states inquired as to whether or not sedans should be included in the category of SUVs. Additionally, the states advocated for the establishment of a definition for MUVs.
Vivek Johri, Chairman of the Central Board of Indirect Taxes and Customs, stated that a lower cess rate will be payable to automobiles in the event that none of the aforementioned criteria are met.
According to what Johri said, an internal committee will discuss whether or not mobility utility vehicles will also be required to meet these criteria in order to fall under the higher cess level.
According to the minister, the Council has determined that the panel of central and state tax officers, also known as the Fitment Committee, would investigate the matter if any further motor vehicle categories need to be added to the 22 percent cess.
In the meantime, Finance Minister Nirmala Sitharaman briefed media following the 48th meeting of the GST Council. She stated that due to a lack of time, the Council was only able to settle on 8 of the 15 agenda items, but that no new levies had been implemented.
Sanjay Malhotra, the secretary of the Revenue Department, announced on Saturday that certain offences, including the willful alteration of material evidence, the failure to furnish information, and the obstruction of any officer in the performance of their responsibilities, have been decriminalised.
