New GST Cess Slabs to Impact MPVs Such as Kia Carens, Maruti Suzuki Invicto, and Toyota Innova Crysta

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The 50th Goods and Services Tax (GST) Council, headed by Union Finance Minister Nirmala Sitharaman, has announced that multi-utility vehicles (MUVs), including sports utility vehicles (SUVs), multi-purpose vehicles (MPVs), and crossover utility vehicles (XUVs), will now be subject to a 22% compensation cess in addition to the existing 28% GST rate. The Council has clarified that irrespective of the vehicle’s name, if it meets the specified criteria, it will attract the same tax rate. Sedans, on the other hand, will not be affected by the higher cess.

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More About GST effect on Auto Sector.

Sitharaman explained that the definition of an SUV, for the purpose of levying the cess, encompasses four parameters. Firstly, the vehicle should be commonly recognized as an SUV. Secondly, it must have a length of 4 meters or above. Thirdly, it should possess an engine capacity of 1,500 cc or higher. Finally, the unladen ground clearance should be a minimum of 170 mm.

Automobile manufacturers are now assessing the impact of these changes and awaiting the official notification from the authorities. Toyota Kirloskar Motor’s Executive Vice President and Chief Compliance Officer, Swapnesh Maru, stated that they would refrain from commenting further until they receive the official notification and understand its details. Similarly, Mahindra & Mahindra’s spokesperson mentioned that they are evaluating the announced changes and will approach the certification agency for potential recertification of relevant models based on the updated definition, if required.

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Gaurav Vangaal, Associate Director of Light Vehicle Production Forecast at S&P Global Mobility, anticipates that the impact of the new GST cess slabs will be greater on the MPV segment compared to SUVs. He specifically highlighted models such as the Kia Carens, Mahindra Marazzo, Toyota Innova Crysta, Toyota Innova Hycross, and Mahindra Bolero Pickup MUV as likely to be impacted by these changes. However, Vangaal noted that SUVs currently appear to be unaffected by the new GST cess slabs.

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The implementation of these revised GST cess slabs is expected to have implications for the MPV sector, while SUVs seem to remain largely unaffected. As the automotive industry awaits further details, manufacturers will carefully assess the impact on their respective models and comply with the certification process as required.

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