The Cabinet’s clearance of the Govt’s proposal for an ordinance to increase the State Compensation Cess limit under GST from 15% to 25% on automobiles is an unfortunate decision. This will increase the post-gst price of many vehicle categories from pre-gs

increase the luxury segment is already highly taxed, which constrains its growth.

"Now, with this proposed measure, the luxury car industry is going to decelerate. If at all it was required, a review Society of Indian Automobile Manufacturers

could have been taken after six months when the outcome of GST regime would have been clearer," he added.

Expressing similar views, Audi India Head Rahil Ansari said: "The taxes on this industry

are already very high and this increase in cess rate will be detrimental to the luxury car industry as we will be forced to hike our prices to levels higher than pre-gst period".

He asked the GST Council to "carefully evaluate the negative impact on this and, if a decision is taken on a 10 per cent cess increase, postpone the implementation for another 6-12 months to evaluate the real impact of the GST on the automobile sector, in particular the luxury segment".

Mahindra & Mahindra Managing Director Pawan Goenka, however, said the passing of ordinance to increase limit of cess to 25 per cent on certain class of vehicles, was along the expected lines.

"What is critical to the industry is when, how much and on what criteria will the cess be increased. Industry has made a representation to the government and we await the final decision," he added.

Jaguar Land Rover India Ltd President and Managing Director Rohit Suri said reduced prices after GST implementation had helped in expanding the market, which had been declining because of high taxation.

Expansion in demand would have helped the industry invest more in local manufacturing and job creation across the value chain, he added.

"We earnestly hope that the government and the GST Council will give due consideration to this matter and desist from raising the cess and putting a dampener on the positive momentum in demand that the industry had started to witness since July 1," Suri said.