Luxury Car Makers See Red, Mercedes Calls GST Cess Increase Unfortunate

Hyderabad (IANS): Luxury Car makers are in for a shock again. After being mute spectators to Indian governments frequent and sudden rule changes, that left many carmakers scrambling, some of the industry’s big names are calling on the government to set clear, stable policies – or face the risk of delays to major investment.

Luxury carmaker Mercedes-Benz on Saturday termed as unfortunate the decision of GST Council to increase the cess on luxury cars, saying this would hurt the segment.

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The German automobile major also hinted that the prices of luxury cars would leap back to pre-GST regime or even higher.

He said that by continuous taxation of the segment, the overall revenue generation was going to be hurt, as the increase in price would hurt hurt demand.

“It seems the contribution of luxury car industry to the total PV market in India will remain constricted, though in the other developed economies, it is on a higher side and continues to rise gradually. With this increase in cess now, the prices are bound to leap back to the pre-GST regime, in some cases higher than the pre-GST regime, thus negating altogether the benefits of GST regime,” he added.

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The Goods and Services Tax (GST) Council, which met here on Saturday, decided to increase the cess on SUVs by seven percent. Finance Minister Arun Jaitley told reporters that in the new tax regime, the SUVs had got 11 percent tax advantage and the Council decided to increase the cess.