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Auto industry meets Hasmukh Adhia; cess, luxury car definition in focus

New Delhi: The auto industry today discussed with Revenue Secretary Hasmukh Adhia, the rate of cess and definition of luxury cars under the GST regime, which is likely to kick in from April next. In the pre-budget meeting with the revenue department, the auto industry had sought clarity from the revenue department on the transitional issues before GST roll out. “We have talked about the cess rate that will apply on luxury cars and its definition. We have given our views,” M&M Executive Director Pawan Goenka told reporters here.

The GST Council, in its meeting last week, had decided on a four-tier GST tax structure of 5, 12, 18 and 28 per cent. Besides, luxury items like high-end cars and demerit goods including tobacco and aerated drinks, will be taxed at the highest rate and would also attract a cess in a way that the total incidence of tax remains at almost the current level. Asked what concerns the auto industry have in the new tax regime, Goenka said there is a need for clarity on the definition, cess rate, how the transitional issues will be taken care of and clarity on incentives that were given by the central and state governments, especially by hilly states.

“It appears to us that the definition of luxury cars will remain the same and the tax incidence will be similar to what it is today. There may be some differential 2-3 per cent up or down, but it will not be a major change,” he said. Maruti Suzuki MD and CEO Kenichi Ayukawa said implementation of Goods and Services Tax (GST) is good for the country but it has to be implemented smoothly. “We are expecting the definition (of luxury cars) to be as it is,” he said. The GST Council, which is chaired by Finance Minister Arun Jaitley, and has state finance ministers as members is likely to decide on the definition of luxury cars and the incidence of cess at its next meeting later this month.