Great news! Compact SUVs such as Venue, Brezza, Sonet could become cheaper with revised GST rates

According to a recent official GST advice release, it was recommended that GST rates be reduced to 5% or zero for several items. One of the directives that stands out for TOI Auto readers concerns the GST tax rates currently applied to SUVs. Current rates range between 20 and 22 percent across the board, and the criteria for classifying a motor vehicle as an SUV varies from state to state. The board chaired by the Union Finance Minister, Nirmala Sitharamanhas now decided on certain criteria by which a vehicle can be classified as an SUV and attract up to 20-22% GST.

Under the new criteria, a vehicle exceeding 1,500cc engine capacity, 4,000mm in length and exceeding 170mm of ground clearance will be classified as an SUV. Considering excise duties, VAT, road tax, motor vehicle tax and GST of 20-22%, the effective taxes on an SUV are almost 50%. However, that would now change for buyers looking for smaller, more compact SUVs.

Based on the above criteria, popular compact SUV offerings such as the Hyundai Venue, Kia Seltos, Maruti Suzuki Brezza and Mahindra XUV 300, could now become cheaper and attract a significantly lower GST tax rate of just 5%.
The Hyundai Venue is offered in both petrol and diesel engines, the diesel engine has a displacement of 1,493cc and the two petrol options are 998cc and 1,197cc respectively. The Venue also has a maximum length of 3,995 mm and a ground clearance of 190-195 mm. The Kia Sonet also sports the same dimensions and gets both 1.0- and 1.2-litre petrol engine options.

The Maruti Suzuki Brezza is another compact SUV that might get cheaper now, it has a 1,462cc petrol engine and has a length of 3,995mm. However the ground clearance is 200mm.
Then there are the Tata Nexon and Mahindra XUV 300 compact SUVs, the Nexon gets a 1,497cc diesel and 1,199cc petrol engine. It has a length of 3,993 mm and a ground clearance of 209 mm. The XUV 300, on the other hand, is also offered in a 1,497cc diesel engine and a 1,199cc petrol engine. It has a length of 3,995 mm and a ground clearance of 180 mm.

While these popular models adhere to most criteria, the Mahindra XUV 300’s ground clearance is closest to the prescribed limit of 170mm, but still higher. Following the 48th GST Council meeting, it was announced that further clarifications could result in price changes for some models. However, automakers are still looking into the matter.
What do you think of this latest development? Should vehicles be taxed at a lower rate in the country?