The GST Council has clarified that ground clearance refers to unladen conditions. MUVs with engine capacities less than 1500cc will continue to attract a 20% cess. The implications of the 'unladen' ground clearance specification need further clarity.
The GST Council has clarified that ground clearance refers to unladen conditions. MUVs with engine capacities less than 1500cc will continue to attract a 20% cess. The implications of the 'unladen' ground clearance specification need further clarity.
PremiumLarge multi-utility vehicles like the Toyota Innova Crysta, as well as SUVs like the Scorpio-N, Hyundai Alcazar and MG Hector Plus and the upcoming new Kia Carens will attract a compensation cess of 22%, as the GST Council clarifies a vehicle no longer has to be "popularly known as an SUV" to attract 22% cess as long as it meets a set of criteria related to height, ground clearance and engine capacity. However, strong hybrid versions of the Innova Hycross & Maruti Suzuki Invicto will continue to be taxed at 20% cess as they benefit from the 2% relaxation in cess given to hybrid vehicles.
"It has been decided to amend the entry 52B in compensation cess notification to include all utility vehicles by whatever name called provided they meet the parameters of Length exceeding 4000 mm, Engine capacity exceeding 1500 cc and having Ground Clearance of 170 mm & above and to clarify by way of explanation that 'Ground clearance' means Ground Clearance in un-laden condition", the Council said.
Now, MUVs meeting the above criteria will be taxed at par with full-sized SUVs such as the XUV700, attracting 28% GST & 22% compensation cess, bringing the total tax levied on the UVs to 50%. Further, SUVs with a laden ground clearance of less than 1700 mm, but meeting other parameters are now likely to attract a higher rate of cess, as unladen ground clearance for such vehicles, including the Mahindra Scorpio-N, Hyundai Alcazar, MG Hector Plus etc is likely to be above 1700mm.
MUVs such as Maruti Suzuki Ertiga, XL6 & Kia Carens have engine capacities less than 1500cc, and will therefore continue to attract 20% cess. However, sources in the industry highlight that the implications of the GST Council's specification of "unladen" ground clearance will need more clarity, as vehicle ground clearance is typically certified in a laden state.