The Goods and Services Tax Council’s decision to raise the cess on mid-sized to large cars and sports utility vehicles between 2 percent and 7 percent is a welcome move but repeated changes in tax rates are a major put-off for companies as well as consumers, said Vikram Kirloskar, vice chairman of Toyota Kirloskar Motors.
When GST was rolled out, I assumed the Council had done their homework because everybody knew the prices would reduce. We need a long-term policy for industry stabilisation.Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motors
Even though the maximum 22 percent hike on SUVs combined with the GST on luxury cars segment is still less than the tax pre-GST rollout, the automakers are wary of constant revisions.
“Since the post cess price of cars will still be lower tha the pre-GST rate, I’m quite relieved,” said Kirloskar.
In the run up to the GST rollout, the industry suffered as manufacturers de-stocked inventories. With constant changes, carmakers would have to again get rid of additional stock, thus accumulating losses, said Kirloskar.
Following government’s push for hybrid cars, Kirloskar said that they are focusing on their hybrid cars segment due to renewed potential in India. Toyota is also looking at re-positioning of vehicles in the segment as a result of rapid changes in regime, said Kirloskar.