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GST Council Increases Cess On Mid-Size, Luxury Cars And SUVs

  • Sep 12, 2017
  • 647 Views

The GST (Goods & Services Tax) Council has officially increased cess on cars. As a result, the 15 per cent cess on mid-size cars, luxury cars and SUVs is now up by 2 per cent, 5 per cent and 7 per cent, respectively. Cess on small cars, hybrids and EVs remains unchanged.


2016 Toyota Fortuner Front Left Quarter Off-RoadCess on SUVs like Toyota Fortuner increased by 7 per cent


The latest update to GST on cars makes SUVs the highest taxed vehicles followed by luxury cars and mid-size cars. The update puts hybrids in a lower tax slab compared to luxury cars and mid-size cars, which is a positive move forward considering hybrids are more fuel efficient and environment-friendly. However, there is a scope for further classifying hybrid cars on the basis of their engine capacity, fuel burnt, size and type of hybrid technology on offer.


Copy of Hyundai_Verna_highres_MG_8534The new Hyundai Verna falls in the luxury car slab as it's powered by engines over 1.5-litre in displacement


For example, a diesel engine based hybrid vehicle should be taxed higher than a petrol based hybrid car but lesser than a diesel-powered mid-size car. Also, if a hybrid car’s dimensions and engine capacity put it in the small car bracket, taxes on such hybrid should be lower than a small car.


Here’s how cars are taxed now


gst tax cess




  1. Small cars – Length under four metre, powered by a petrol engine not greater than 1.2-litre or a diesel engine not greater than 1.5-litre, by displacement

  2. Mid-size cars – Length under four metre, powered by either a petrol or a diesel engine not greater than 1.5-litre, in terms of displacement

  3. Luxury cars – Length over four metre, powered by either a petrol or a diesel engine that is greater than 1.5-litre in terms of displacement

  4. SUVs – Length over four metre and ground clearance over 170mm, powered by either a petrol or a diesel engine that is greater than 1.5-litre in terms of displacement

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