Breaking Down the Big Change in SUV Tax Following the GST Council's Meeting

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Breaking Down the Big Change in SUV Tax Following the GST Council's Meeting (Image: Mahindra)
Breaking Down the Big Change in SUV Tax Following the GST Council's Meeting (Image: Mahindra)

Delhi : The Goods and Services Tax (GST) Council resolved on Saturday to establish a unified definition for sports utility vehicles throughout all states in the nation, attracting a higher tax rate.

At the moment, vehicles with an engine above 1500 cc, a length over 4000 mm, and a ground clearance over 170 mm are subject to a 28% GST as well as a 22% cess, bringing the overall tax rate to 50%. However, states do not consistently define what constitutes an SUV, which causes confusion among automakers.

The council, which was made up of state finance ministers and presided over by the union finance minister, concluded that in order for a vehicle to be classed as an SUV, it must satisfy all requirements, including those for engine size, length, and ground clearance.

"Vivek Johri, Chairman of the Central Board of Indirect Taxes and Customs, stated that a lower cess rate will be in effect for vehicles that did not match any of these requirements."

According to Johri, an internal committee will also decide if mobility utility vehicles should also adhere to these standards in order to fall under the higher cess level.

The ministerial panel's report on the taxation of online gambling enterprises and casinos, which has implications for billion-dollar businesses like Tiger Global-backed Dream11 and Sequoia Capital-backed Mobile Premier League, was not discussed by the body.