Mercedes-Benz India may go back to pre-GST prices as new cess kicks in

German luxury carmaker Mercedes-Benz may soon revert to the pre-GST prices of its luxury cars and SUVs in India. This follows the Union Cabinet's nod to increase cess for larger cars from 15 percent to 25 percent.

Speaking at the inaugural function of the new AMG Performance Centre in Chennai, Roland Folger, the Managing Director of Mercedes-Benz India, hinted at the possibility of returning to "square one" if the government declines to intervene, reported PTI.

It must be recalled that several carmakers had revised the prices of some models to pass on the benefits of the new pan-India tax regime that came into effect from July this year.

Now, with the latest approval by the government to hike levies on luxury cars and sports utility vehicles to 25 percent from 15 percent, we could see the prices returning to their previous mark or even exceeding it if the carmakers make good on their threat after raising concerns.

Mercedes-Benz India had revised the prices of its models in the country after GST implementation. Under the GST regime, cars more than 4 metre in length and bigger engines stand to get a tax rate of 43 percent.

With the proposed increase in cess, the cars in this segment would attract 25 percent cess, taking the total tax liability to 53 percent from the current 43 percent.

On the other hand, cars less than 4 metre in length get a tax of 29 percent as opposed to the previous 31.5 percent. Cars with more than 1.2L petrol and 1.5L diesel engine capacity will be taxed at 43 percent, which is almost 2 percent lower than the previous 44.7 percent tax slab.

The GST Council decided on August 5 that the cess on larger cars should be increased by 10 percent, and the Cabinet approved this on August 30. It is not yet known what the actual impact of the hike in the cess on the SUVs larger cars would be.