Enhanced Definition for Greater Tax Clarity
In a move to streamline taxation on utility vehicles, industry experts have welcomed a refined definition of SUVs by the Goods and Services Tax (GST) Council. The updated criteria specify that an SUV must now meet three key parameters: a length of at least 4 meters, an engine capacity exceeding 1,500 cc, and an unladen ground clearance of 170 mm or more. This adjustment aims to eliminate ambiguity in the tax structure, providing a more precise basis for applying additional cess over the standard GST rate.
Implications for Vehicle Pricing and Industry Impact
The revised definition is expected to impact vehicle pricing, as the maximum cess of 22% will be uniformly applied to all SUVs meeting the new standards. This change clarifies that the high cess rate applies to vehicles fitting the updated criteria, irrespective of the manufacturer’s classification. Although companies like Maruti Suzuki may adjust their pricing strategies in response, the industry anticipates that the clear definition will enhance consistency and transparency in the tax system.