A car SUV tax rate would only be deemed an SUV if it fully complied with all four requirements, according to the latest GST explanation.
On December 17, the Goods and Services Tax (GST) Council, which is chaired by Union Finance Minister Nirmala Sitharaman, published a clarification defining the four requirements for a passenger vehicle to be classed as an SUV.
According to the new definition, a vehicle will only be classified as an SUV or sports utility vehicle if it satisfies all four requirements, namely that it is commonly referred to as an SUV, has an engine larger than 1,500 ccs, is longer than 4,000 mm, and has a ground clearance of 170 mm or greater.
The Goods and Services Tax Council has determined that sport utility vehicles should be defined uniformly across the nation. According to the GST council meeting, which was presided over by Union Finance Minister Nirmala Sitharaman, cars with engine capacities over 1,500 CC, lengths over 4,000 mm, and ground clearances over 170 mm will be subject to a 28% GST and a 22% cess.
Read More: New Hyundai Creta receives 5 stars at ASEAN NCAP.
As a result, the effective tax rate is 50%. However, there isn’t currently a “uniform definition” for what constitutes an SUV in each state. The council decided that in order for a vehicle to be labeled as a sport utility vehicle, it had to meet all the requirements, including those for engine size, length, and ground clearance.
Although the clarification was made in response to suggestions made by the Society of Indian Automobile Manufacturers (SIAM) during discussions with the Ministry of Finance, it will not affect SUV costs for end users.
A representative for SIAM stated that operations are unaffected and that the clarification was solely made to clear any confusion over the definition of the SUV body style. Regarding GST payments on certain of their models, numerous manufacturers were concerned about the unevenness among the Indian states.
The clarification of what constitutes an SUV, however, has undoubtedly hurt the brawny “image” of some passenger vehicle types being sold as SUVs, even if it hasn’t had an effect on costs. For instance, although they all fall into the sub-4-meter segment, the Maruti Suzuki Brezza, Hyundai Venue, Tata Nexon, and Kia Sonet do not technically meet the definition of an SUV.
In contrast, the SUV word is being heavily used by automakers to capitalize on rising consumer demand and their desire for high-perched vehicles. In India’s passenger car market, SUVs are the segment with the quickest rate of growth. Simply based on body shape, SUV sales increased by 46% between April and October 2022, crossing a cumulative volume of 1 million units within the first seven months of FY2023.
There are four requirements for an SUV.
A car will only be classified as an SUV, or sports utility vehicle, according to the new definition, if it satisfies all four requirements, including the fact that it is commonly known as such, has an engine larger than 1,500 cc, is longer than 4,000 mm, and has a ground clearance of at least 170 mm.
SUV customers’ costs are unaffected.
Although the clarification is based on suggestions made by the Society of Indian Automobile Manufacturers (SIAM) in discussions with the Ministry of Finance, it would have no influence on the prices of SUVs for end users.
business as usual, according to a spokeswoman for SIAM, and the purpose of this clarification is just to clear up any confusion over the definition of the SUV body style. Concerns about GST payments on certain of their models were raised by numerous manufacturers due to the uneven treatment of the states in India.
Read More: Top 5 run scorers in T20Is for the year 2022
The clarification of what constitutes an SUV, however, has undoubtedly hurt the brawny “image” of some passenger vehicle types being sold as SUVs, even if it hasn’t had an effect on costs. For instance, although they all fall into the sub-4-meter segment, the Maruti Suzuki Brezza, Hyundai Venue, Tata Nexon, and Kia Sonet do not technically meet the definition of an SUV.
On the other hand, the term “SUV” is being widely used by automakers to capitalize on rising consumer demand for high-perched vehicles. The market for passenger vehicles in India is seeing the fastest growth in the SUV segment. Simply measured by body design, SUV sales increased by 46% annually between April and October 2022, surpassing cumulative volumes.