What is an SUV? GST council explains

If a car fulfills the criteria, it will attract a GST of 28 per cent and a 22 per cent of cess, taking the effective tax rate on that vehicle up to 50 per cent.

Hyderabad: Often some commodities are so similar that only a few metrics can differentiate them. This was the case for SUVs which had created confusion among manufacturers of the cars.

As the confusion made it difficult to apply tax to the vehicles, the GST Council gave a set definition of SUVs (sports utility vehicles) and also gave a list of parameters to define MUVs (multi-utility vehicles) both of which had been the subject of confusion.

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The higher rate of compensation cess, a form of tax levied government, of 22 per cent applies to a motor vehicle that will fulfill the given four conditions, according to the GST council – it is popularly known as SUV, has an engine capacity exceeding 1,500cc, length exceeding 4,000 mm, and has a ground clearance of 170 mm and above.

If a car fulfills the criteria, it will attract a GST of 28 per cent and a 22 per cent of cess, taking the effective tax rate on that vehicle up to 50 per cent.

Given the clarification, scores of compact SUVs in the market like Hyundai Venue, Maruti Suzuki Brezza, Mahindra XUV 300, and others may have a change in their price.

As some compact SUVs do not meet the said criteria, they are likely to fall under the 5 per cent GST category and become cheaper to purchase.