[TSIched'Out]

The Goods and Services Tax (GST) Council on Saturday decided to have a single definition across all states in the country for sports utility vehicles, attracting a higher tax rate.

Currently 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 define a vehicle as a SUV, leading to confusion among automakers.

The council, composed of state finance ministers and chaired by the Union Finance Minister, decided that all the criteria including engine capacity, length and ground clearance has to met for a vehicle to be classified as a SUV.

Here's the link to the news article:

https://www.ndtv.com/india-news/gst-...gaming-3615503

Would this mean lower taxes on some of the pseudo SUVs? And what about manufacturers adding factory fitted sidesteps to lower the GC to become eligible for lower rate of tax? Your guess is as good as mine!

Keep Revvving!

[echo77]

https://pib.gov.in/PressReleasePage.aspx?PRID=1884399

The higher rate of compensation cess of 22% is applicable to motor vehicle fulfilling all four conditions, namely, it is popularly known as SUV, has engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above

Looks like ALL four of the criteria need to be true:
1. it is popularly known as SUV
2. has engine capacity exceeding 1500 cc
3. length exceeding 4000 mm
4. ground clearance of 170 mm or above

Now, what happens to all SUVs where the Engine Capacity is just under 1500 cc. Will Cess be reduced from 22% to 17%?

For eg
Hyundai 1.5 Diesel is actually 1493 cc
Maruti 1.5 Petrol is actually 1462 cc

[Chhanda Das]

So let me get this straight. The 1.6 petrol and 1.6 diesel Creta are SUVs while the 1.4 diesel, 1.4 petrol, 1.5 petrol and 1.5 diesel Creta are not SUVs ? Do the politicians have any idea how stupid that sounds ? This is a perfect example of one of the reasons why we Indians get laughed at on the world stage despite what our leaders try to project

[shankar.balan]

Seriously. This is what a singular lack of education and quality leadership causes.

How hard can it be to adopt a sensible and scientific Internationally accepted definition of ‘type of vehicle’.

But this is absolutely intentional I am sure, because the consumers continue buying SUVs and high ground clearance vehicles in an absolutely unabated manner. So these politicians are all rubbing their greedy hot hands in glee at the taxes they will collect for their filthy ends.

And best of all I am sure that all those illustrious members of that committee are being driven around in Innovas, Fortuners, Marazzos, Scorpios, Range Rovers and what not. All paid for of course, with our Taxes or ‘gifted’ by those perpetuators of corruption, our very own venal and self serving Industrialists and Business persons.

[Safari Persona]

Hey, at least all hatchbacks with a clearance of over 170mm are not being designated as SUVs like carmakers would have you believe.

[shancz]

Originally Posted by echo77

1. it is popularly known as SUV
2. has engine capacity exceeding 1500 cc
3. length exceeding 4000 mm
4. ground clearance of 170 mm or above

Thanks for sharing the official document
Was a bit surprised to see something this important being mentioned as a 4 liner point.

All questions raised by members are spot on so let me add to the list too.

- What is the yardstick to gauge "popular" ? I hope they don't give some even more nonsensical reasoning.
- So all the CSUVs won't qualify as SUVs due to length at least ? Finally confirming their hatch-on-stilts reality.
- Finally MSIL have to remove the S-Presso from their "SUV" list ?
- Finally the Honda City won't have to pay "SUV tax" due to GC and so would the Virtus 1.0 due to engine but not the Virtus 1.5 as its an SUV

I could go on but will stop here as I still have a ray of hope that this isn't what it looks like and a more sensible version would finally make it to execution.

[DicKy]

Originally Posted by shancz

- Finally the Honda City won't have to pay "SUV tax" due to GC and so would the Virtus 1.0 due to engine but not the Virtus 1.5 as its an SUV .

Bet every current 1.5l is actually 14xx cc. Also how every 2.0l is 199x cc. The last 1600cc engine was the Civic/CRV diesels. Not just in India, many countries have the tax slabs for 1.5l and 2.0l, hence why they are most popular. Not to say easier for modular engine families.

Just pray that this new rule doesn't lead to many 4m plus vehicles getting bogged down by 1.5l engines.

[krinpit]

What would be the definition of SUV if Team-BHP has to come up with one and present to the govt? I am a noob so can't contribute to this. Hope the seniors can take a shot at this.

[shancz]

Originally Posted by DicKy

- Bet every current 1.5l is actually 14xx cc. Also how every 2.0l is 199x cc.
- Not just in India, many countries have the tax slabs for 1.5l and 2.0l, hence why they are most popular. Not to say easier for modular engine families.
- Just pray that this new rule doesn't lead to many 4m plus vehicles getting bogged down by 1.5l engines.

- True, VW 1.5 is also 1498cc

- Makes sense hence the range of engine options on global platforms.

- I think they're way ahead of us, Grand Vitara, HYRyder already are along with rumours of the 1.5 turbo on the TML twins.

[thanixravindran]

There is another thread about GST on car prices where this is discussed. Hope this thread gets merged.

Thanks to the Turbo, now petrol engine displacement is also shrinking. Correct way to implement is defining SUV with whatever definition in CMVR as a class and fix taxation on that class of vehicle. Else it is just another irrational move leaving the interpretation at Babu level for obvious reasons (read harassment and litigation). Given the tax hungry nature of governments they could have added no of seats (6 and above) instead of 'popular' SUV definition.

[autobahnjpr]

The definition as given in the circular applies only for the taxation purpose. It does not alter the characteristic or the nomenclature of the vehicle. What is being done is to remove the ambiguity for taxation purpose. So 1.6 liter will attract higher taxation than 1.4 liter model.

The circular has not redefined what is to be called SUV and what is to be not. That interpretation is incorrect.

Originally Posted by Chhanda Das

So let me get this straight. The 1.6 petrol and 1.6 diesel Creta are SUVs while the 1.4 diesel, 1.4 petrol, 1.5 petrol and 1.5 diesel Creta are not SUVs ? Do the politicians have any idea how stupid that sounds ? This is a perfect example of one of the reasons why we Indians get laughed at on the world stage despite what our leaders try to project

[echo77]

Originally Posted by autobahnjpr

The definition as given in the circular applies only for the taxation purpose. It does not alter the characteristic or the nomenclature of the vehicle. What is being done is to remove the ambiguity for taxation purpose. So 1.6 liter will attract higher taxation than 1.4 liter model.

The circular has not redefined what is to be called SUV and what is to be not. That interpretation is incorrect.

Yes you are correct. Now, it's clear that only matching ALL FOUR of those criteria will the SUV be subject to 22% cess. Even if any one of those four criteria are not matched, then the SUV will be subject to 17% cess. Vehicle will still be called a SUV as per point #1.

[Chhanda Das]

Originally Posted by autobahnjpr

The definition as given in the circular applies only for the taxation purpose.

Yes, both the Maruti Suzuki Espresso and the Tesla Model X are "popularly" known/marketed as SUVs. Now a 1.6 petrol Creta costing around INR 13 lakhs would attract the same rate of 22% cess as a 4x4 diesel Fortuner costing approximately INR 45 lakhs. Makes perfect sense

[r24x7]

Long running thought in head. How will the 3 Door Thar be classified going forward? Would the prices reduce , if this isnt going to be part of 22% cess slab?

• Sub 4m in Length
• ~2L Engine options
• >200MM GC

[udainxs]

This is quite an interesting development, but which will open up another can of worms as other have suggested!

As per the new classification, the Mahindra Thar wont qualify as an SUV, officially atleast

Is the Thar taxed as an SUV today?

I guess nobody will mind, if that leads to a cost reduction?

@Mods - please delete this post. I had the same thought as r24x7 above, and left the draft open for a bit