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India Hikes Taxes on Big Cars, SUVs
India’s cabinet has approved a measure that would increase the maximum sales tax on luxury vehicles and SUVs to as much as 53%.
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India’s cabinet has approved a measure that would increase the maximum sales tax on luxury vehicles and SUVs to as much as 53%.
Large cars, luxury vehicles and big SUVs currently face a maximum 28% levy, plus an extra 15% under the country’s new national goods and services tax. The proposed ordinance raises the cap on the latter tax to 25%.
The GST, which was launched earlier this month, replaces myriad local and state taxes that varied by region. The government has calculated that average overall tax rates on many goods are now lower under the new scheme.
Finance Minister Arun Jaitley says the ordinance merely enables the 25% rate. If and when the suggested higher tax is implemented will be decided by a special GST council of national and provincial finance experts.
Luxury brands such as Audi, BMW and Mercedes-Benz complain that the high tax rate will be a “strong deterrent” to the luxury segment and could stifle growth in the auto industry overall.
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