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Frequent changes in tax rates may adversely impact investment: Hyundai

GST Council decided to hike cess on mid-size cars by 2%, on large cars by 5%, on SUVs by 7%

Press Trust of India  |  New Delhi 

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Hyundai Motor (HMIL) on Tuesday hit out at the frequent changes in rates on saying investment for new products and technology will be adversely impacted in the absence of consistent and long term policy.

The Council last week decided to hike cess on mid- size by 2 per cent, on large by 5 per cent and on by 7 per cent to bring rates on these at pre-levels.

"Implementation of was to create single unified large market with simplified structure for auto industry. However, the recent rolling back to multiple rates with pre classification has come as a set back to industry, shaking the confidence of auto manufacturers," HMIL said in a statement.

The company, which is the second largest car manufacturer in the country after Suzuki India, expects the decision to hike cess will impact sales during the festive season.

"We expect the coming festive season will witness low customer sentiment on new purchase decision," it said.

Further, in the absence of consistent and long term policy the investment for new products and new technology will be adversely impacted, it added.

With the government notifying levy of increased cess, the effective rate on mid-size will be 45 per cent, and on large it will be 48 per cent.

The rate will be 50 per cent on sports utility vehicles (SUVs), which include with length exceeding 4,000mm and having a ground clearance of 170mm and above.

However, the cess on small and cars, hybrid and those carrying up to 13 passengers has not been raised.

Under the regime, attract the highest slab of 28 per cent and on top of that a cess is levied.

Automakers such as Mahindra & Mahindra, Toyota Kirloskar Motor, Audi, and JLR have already announced plans to raise prices due to hike in cess.

First Published: Tue, September 12 2017. 18:10 IST