Mercedes Benz slams hike in cess

New Delhi: German luxury carmaker Mercedes-Benz on Sunday slammed the GST Council’s decision to hike cess on luxury cars, calling its unfortunate which “overlooks their contribution to industry and the economy.”

The increased GST cess on mid-sized, luxury and SUV cars will come into effect from Monday. 

“The decision to increase the cess yet again is very unfortunate and totally overlooks  the contribution we make to the industry and to the economy,” said Roland Folger, managing director and CEO, Mercedes-Benz India.

He said that though luxury car industry’s volume contribution is very low, their value wise contribution is much higher and that has immense potential to grow even more in the future, had there been fair taxation.

“However, by continuous taxation of the segment, the overall revenue generation is going to be hurt, as the increase in price is going to hurt demand,” said Mr Folger. 

He said that it  seems the contribution of luxury car industry to the total passenger vehicle market in India will remain constricted, though in the other developed economies, it is on a higher side and continues to rise gradually. 

“With this increase in cess now, the prices are bound to leap back to the pre-GST regime, in some cases higher than the pre-GST regime, thus negating altogether the benefits of GST regime,” added Mr Folger.

The GST Council, on Saturday, decided to hike cess on mid-sized cars by two per cent, taking the effective GST rate to 45 per cent.

Also, cess on luxury cars has been hiked by five per cent, taking the total GST incidence to 48 per cent while that of SUVs by seven per cent to 50 per cent.