When purchasing an SUV in India, buyers often pay over 50% of the vehicle’s cost in taxes, which significantly increases the final price. The high taxation is a combination of the Goods and services Tax (GST), compensation cess, and various other charges levied by both central and state governments.
Breakdown of Taxes:
Goods and services Tax (GST): The base GST rate for vehicles is 28%. This applies to all cars, including SUVs.
Compensation Cess: For SUVs, a compensation cess is added on top of the base GST. The cess for SUVs is as high as 22%, resulting in a total tax rate of 50% on the ex-showroom price.
State Road Tax: After paying GST and cess, buyers also have to pay state-specific road taxes, which vary from state to state. Road tax rates for SUVs are typically between 10-20% of the vehicle’s cost.
Other Charges: Additional charges, such as registration fees, insurance, and other handling costs, further inflate the total amount.
The government’s rationale for this high taxation on SUVs is based on the principle that they are seen as luxury items due to their size, fuel consumption, and higher carbon emissions. While these taxes contribute to public revenue, they make SUVs significantly more expensive for consumers, sometimes nearly doubling the on-road price.
Breakdown of Taxes:
Goods and services Tax (GST): The base GST rate for vehicles is 28%. This applies to all cars, including SUVs.
Compensation Cess: For SUVs, a compensation cess is added on top of the base GST. The cess for SUVs is as high as 22%, resulting in a total tax rate of 50% on the ex-showroom price.
State Road Tax: After paying GST and cess, buyers also have to pay state-specific road taxes, which vary from state to state. Road tax rates for SUVs are typically between 10-20% of the vehicle’s cost.
Other Charges: Additional charges, such as registration fees, insurance, and other handling costs, further inflate the total amount.
The government’s rationale for this high taxation on SUVs is based on the principle that they are seen as luxury items due to their size, fuel consumption, and higher carbon emissions. While these taxes contribute to public revenue, they make SUVs significantly more expensive for consumers, sometimes nearly doubling the on-road price.
click and follow Indiaherald WhatsApp channel