Chennai, September 22: The frequent fluctuations in the Goods and Service Tax (GST) cess rates have left consumers in a fix over whether or not to buy the car of their choice. The cars that were touted to have benefitted the most after the GST implementation seem to be the worst affected after the new cess hike that came into effect from September 11.
The GST Council on September 9 decided to hike the cess rates on mid-sized cars by 2 percent, large cars by 5 percent and SUVs by 7 percent taking the effective GST rates to 45,48 and 50 percent respectively. Under the GST regime that came into effect from July 1, even though cars attracted the highest tax rate of 28 percent in addition to a cess of 15 percent, prices had dropped by almost Rs.3 lakh and it was to fix this anomaly that the recent cess hike of 25 percent was brought about.
The following video explains in detail the GST cess hike.
Finance Minister Arun Jaitley has said “The pre-GST rates have not been restored and even though the council had a headspace of hiking the cess by 10 percent, it has been hiked only up to 7 percent and that too only for large vehicles where the buyers could afford the hike.
Karthikeyan working at the Jeep showroom at Nungambakkam claims to have had a few cancellation of orders after the cess hike. “More and more customers who initially had plans to buy the top end variant are now going for the lower variants as there is a difference of almost Rs.1 lakh in tax because of the cess hike. The price of the lower variant itself has gone up by almost Rs.2 lakh” he said.
Udayakumar who works at the Volvo showroom located on Anna Salai said his sales had come down by 5-10 percent as all models were equally affected. He also said customers were holding back on their decision on making the purchase thinking that the price might come down in the wake of fluctuations. He also added “What we are doing to beat this cess hike is pitching cars that were manufactured before the GST implementation so that the customers don’t have to pay the revised prices.”
M Ashok Kumar, senior sales officer at Lanson Toyota whose Fortuner and Innova models have been the most badly hit after the cess hike, said “Sales for Innova have come down by almost 50 percent compared to the same month last year. Our manufacture has also been hit because of the 1 percent TCS (tax collected at source) tax we have to pay for products above Rs.10 lakh. ”
Almost all the dealers unanimously oppose the GST cess hike and claim that the vehicular dimensions and engine capacity should not be the sole yardsticks for GST classification. The brand of the car should also be taken into account while setting the tax rates to make it a level playing field.
Buyers vented their anger out on twitter.
Damn it. I just suggested one of my relatives to buy a SUV because decrease in prices due to GST? https://t.co/3ecz9SZJMB
— bharat chordiya (@Bharat9203) September 9, 2017
— Rishi (@Rishiexecs) September 25, 2017