GST Council Meet 2023: Tax incidence on MUVs to increase with 22% cess

The companies may decide to pass it to consumers or reduce margin slightly.

The tax incidence on multi utility vehicles (MUVs) will increase slightly henceforth as the Goods and Services Tax Council in its July 11 meeting approved 22 percent cess on them, at par with sports utility vehicles (SUVs).

GST cess has been increased from current 20 percent to 22 percent in MUVs that meet the length and engine criteria, the council decided in its 50th meeting. Tax incidence on companies will increase by 2 percent.

The companies may decide to pass it to consumers or reduce margin slightly.

Multi-utility vehicles (MUVs), with length more than 4 metres, engine capacity of more than 1,500cc and ground clearance of 170 mm will now attract 22 percent cess similar to SUVs.

The SUVs and MUVs are in the 28 percent GST slab.

Sedans will not come under the purview of higher cess, Finance Minister Nirmala Sitharaman clarified during the press conference.

Based on the recommendation of the GST Council, at its 21st meeting held in September, 2017, a compensation cess of 22 percent was notified on SUVs.

The proposal was discussed and approved by the GST Council as it was seen that there were other utility vehicles that satisfy the conditions of length greater than 4,000 mm but are popularly called as Multi Utility Vehicles (MUVs) or multipurpose Vehicles or Crossover Utility Vehicles (XUVs).