GST Council lays down criteria to define a vehicle as an SUV. Full details

Cars with engine capacity exceeding 1500 cc, length exceeding 4000 mm and having ground clearance of 170 mm attract a GST of 28% and a 22% cess, taking the effective tax rate to 50%.

The Goods and Services Tax Council has decided to have a single definition for sports utility vehicles across the country. The GST council meet chaired by Union finance minister Nirmala Sitharaman said that the cars with engine capacity exceeding 1,500 CC, length more than 4,000 mm and a ground clearance of 170 mm will attract a GST of 28 per cent and 22 per cent cess, Reuters reported.

The GST Council decided that all the criteria including engine capacity, length and ground clearance has to met for a vehicle to be classified as a SUV. (Representational image)

This means an effective tax rate adds up to 50 per cent. But the states are yet to have a ‘consistent definition’ to define a vehicle as an SUV. The council ruled all the criteria which include engine capacity, length and ground clearance needed to be met for a vehicle to be classified as a sports utility vehicle.

Central Board of Indirect Taxes and Customs chairperson Vivek Johri said if the cars don't meet any of the mentioned criteria, then lower cess rate will be applicable. He added that an internal panel will review whether mobility utility vehicles also need to meet these criterial to come under the higher cess threshold

After the announcement, the Society of Indian Automobile Manufacturers (SIAM), an auto industry body, lauded the GST council's clarification on the definition of SUVs, PTI reported.

In a statement, SIAM said the GST council's clarification brought in a clarity that higher rates of compensation cess of 22% and 28% GST will be applicable on the vehicles meeting the conditions laid down during the meet.