Big SUVs and Sedans To Get Cheaper With Lower GST Rates Soon

Big SUVs and Sedans GST Rates Likely To Reduce

The Big SUVs and Sedans GST rate in India may be cut soon, making these premium vehicles more affordable for customer. Right now, large SUVs and luxury sedans attract up to 50 percent tax, which is highest GST slab. But as per government discussions, the tax may be reduced to 40 percent. If this happens, the price of many big cars will drop by good margin.

Current GST on Big SUVs and Sedans

Presently, the total GST on big cars is 28 percent tax + 22 percent cess, which make it 50 percent. This is why luxury SUVs and premium sedans are priced very high in India compared to other countries. Now, government is considering removing the cess and keeping only 40 percent GST. Some states have demanded extra cess to continue, but reports say the centre is preferring a flat 40 percent rate.

Why Government Considering Cut in GST

The cess on automobiles was introduced only for five years to compensate states for revenue loss when GST was implemented. Later, it was extended for few more years, especially after COVID-19 when state revenue went down. But sources now say the cess will finally go away and only 40 percent GST remain.

If this happens, Big SUVs and Sedans GST cut will give higher absolute price benefit compared to small cars. Recently small hatchbacks GST also reduced from 29 percent to 18 percent. This means all ICE vehicles – petrol, diesel, hybrid – will get cheaper and price gap with EVs will also reduce.

Impact on EV vs ICE Car Market

EVs are already at 5 percent GST, but their upfront cost is higher than petrol or diesel cars. With GST cut on SUVs and sedans, the gap between EV and ICE cars become smaller. EV running cost is still low, but many buyer complain about high initial cost. This move may push car makers to balance both segments better.

Will Car Companies Pass Benefit to Customer?

One big question is whether car companies will pass GST benefit directly to customers. In past, many OEMs not reduce price after tax cut, instead keep margin higher. Government is worried about same, because anti-profiteering clause not apply in this case.

However, industry sources say that this time, auto companies likely to reduce price of big SUVs and sedans because demand is already strong in SUV segment. And with festive season like Diwali coming, lower price can help increase showroom footfall and sales volume.

SUV Market Growing Fast in India

In recent years, SUV sales already gone higher than small hatchback sales in India. If GST reduction makes them even cheaper, SUV segment will see more growth. At the same time, small car segment, which has seen decline in last 2-3 years, may also get some revival as GST slabs reduce across vehicle category.

Big SUVs and Sedans GST FAQs

What is the current GST on big SUVs and sedans?

At present, big SUVs and sedans are taxed 28% GST + 22% cess = total 50%.

What will be the new GST rate on big SUVs and sedans?

The GST on big SUVs and sedans may reduce to 40% after revision, as per reports.

Will luxury SUVs become cheaper after GST cut?

Yes, if GST goes down to 40%, luxury SUVs and sedans could see big price cut in India.

Why is government planning to cut GST on cars?

The cess was introduced for 5 years to cover state revenue loss after GST rollout. Now it is ending, so rates may reduce.

Will small cars also get GST cut?

Yes, small hatchbacks are already moved from 29% GST slab to 18% GST slab, making them cheaper by 12-13%.

When will GST cut on big SUVs and sedans be decided?

Final decision is expected in the next GST Council meeting, headed by Finance Minister Nirmala Sitharaman.