GST Council has decided upon having a single definition across all states in the country for SUVs attracting a higher tax rate.
How it is today
At present, cars with engine capacity exceeding 1500 cc, length exceeding 4000 mm and having ground clearance of 170 mm attract a GST of 28% and a 22% cess, taking the effective tax rate to 50%.
However, states do not have a consistent definition for an SUV so this leads to confusion among automakers.
Parameters
Composed of state finance ministers and chaired by the Union Finance Minister the Council decided that all the criteria including engine capacity, length and ground clearance has to meet for a vehicle to be classified as a SUV.
“If cars do not meet any of these criteria, lower cess rate will be applicable,” said Vivek Johri, Chairman of Central Board of Indirect Taxes and Customs.
Something important overlooked?
“An internal committee will also consider whether mobility utility vehicles will also have to meet these criteria to come under the higher cess threshold”, Johri said.
The body did not discuss a report prepared by a ministers’ panel on how online gaming companies and casinos should be taxed, an issue that affects billion dollar companies such as Tiger Global-backed Dream11 and Sequoia Capital-backed Mobile Premier League.
