GST hike on SUVs unlikely to put the brakes on auto sales The GST Council, which is the governing body for Goods and Services Tax (GST) in India, decided to revise the tax structure for SUVs in its 50th meeting.

The new definition of SUVs includes all Utility Vehicles (UVs) that measure more than 4000mm in length, have an engine displacement of more than 1.5 litres, and with a ground clearance of 170mm or more.

These SUVs will now attract a 22% compensation cess over and above the existing 28% GST rate. This means that the total tax incidence on SUVs will be 50%.

Industry observers believe that the GST hike on SUVs is unlikely to have a significant impact on overall auto sales. This is because SUVs make up for less than 12% of auto sales in India.

The GST hike on SUVs is likely to be more significant for imported SUVs, as they will be subject to both the 22% cess and the 28% GST. The hike could also lead to some manufacturers increasing the prices of their SUVs, in order to offset the increased tax burden.

However, it is also possible that some manufacturers may absorb the increased tax burden, in order to maintain their competitive position in the market.

Overall, the impact of the GST hike on SUVs on the auto sector is still unclear. However, it is likely to have a more significant impact on the sales of some specific SUVs, especially those that are priced at the higher end of the market.

However, the hike could have a negative impact on the sales of some specific SUVs, especially those that are priced at the higher end of the market.