Auto companies today unanimously rejected the government move to increase cess on SUVs and large cars. It may be recalled that the cess on such vehicles has been revised from the current 15 percent to 25 percent. Luxury vehicle manufacturers said that the increase in cess on SUVs and large cars is against the tenets of liberal market dynamics. The auto companies said that frequent changes in tax rates would affect their future plans of expansion under ‘Make in India’ initiative. Most of the top auto companies such as Audi, BMW, Mercedes-Benz and Toyota Kirloskar Motor said that they have already reduced the prices of automobiles to ensure that benefits of GST would be passed on to the end customer. However, with the increase in cess, it would hurt the industry and the entire ecosystem.
The auto companies said that constant changes in policy makes it difficult for them to undertake long-term planning, which is key to business success. They also said that such frequent policy changes will reflect negatively on India’s financial ratings. As per the existing structure, SUVs and luxury cars attract 28 percent GST and a cess of 15 percent. Under the new structure, the cess has been revised to 25 percent. Speaking about the development, Mercedes-Benz India MD and CEO Roland Folger said, “As a leading luxury car maker, this will also affect our future plans of expansion under ‘Make in India’ initiative, which aims at making and selling world-class products in India, with the latest technology for end-consumers.”