Big News! Compact SUVs like Venue, Brezza, Sonet could get cheaper as GST rates revised

As per a recent official GST Council release, it has been recommended that GST rates be reduced to 5 percent or nil for several items. One of the directives that stands out for TOI Auto readers, is regarding the GST tax rates currently levied on SUVs. The current rates vary between 20 to 22 percent across the board and the criteria for a motor vehicle to be classified as an SUV varies across states. The council chaired by Union Finance Minister, Nirmala Sitharaman, has now decided a certain criteria based on which a vehicle can be classified as an SUV and attract up to 20-22% GST.

Under the new criteria, a vehicle exceeding engine capacity of 1,500 cc, 4,000 mm in length and exceeding 170 mm in ground clearance will be classified as an SUV. Considering excise, VAT, road tax, motor vehicle tax and GST of 20-22%, the effective taxes on an SUV are almost at 50 percent. However, this would now change for buyers looking at smaller, compact SUVs.

Based on the above criteria, popular compact SUV offerings such as the Hyundai Venue, Kia Seltos, Maruti Suzuki Brezza and Mahindra XUV 300, could now become cheaper and attract a considerably lower GST tax rate of just 5 percent.
The Hyundai Venue is offered in both petrol and diesel engine options, the diesel engine has a 1,493 cc capacity and the two petrol options are 998 cc and 1,197 cc respectively. The Venue further has a maximum length of 3,995 mm and a ground clearance of 190-195 mm. The Kia Sonet also sports the same dimensions and gets both 1.0 and 1.2-litre petrol engine options.

The Maruti Suzuki Brezza is another compact SUV that could become cheaper now, it gets 1,462 cc petrol engine and has a length of 3,995 mm. However the ground clearance is at 200 mm.
Then there are the Tata Nexon and Mahindra XUV 300 compact SUVs, the Nexon gets a 1,497 cc diesel and a 1,199 cc petrol engine option. It has a length of 3,993 mm and a 209 mm ground clearance. The XUV 300 on the other hand is also being offered in a 1,497 cc diesel and a 1,199 cc petrol engine. It has a length of 3,995 mm and ground clearance 180 mm.

While these popular models adhere to majority of the criteria, the ground clearance of the Mahindra XUV 300 is the closest to the prescribed limit of 170 mm but still exceeding. After the 48th GST Council meeting, it was announced that additional clarification may result in changes to prices of certain models. However, the car manufacturing companies are still looking into the matter.
What are your thoughts on this latest development? Should vehicles be taxed at a lower rate in the country?