GST Effect on Hybrid cars: Maruti Suzuki will continue to sell hybrids despite unfavourable rates

Under the new tax regime, hybrid vehicles are in the same slab as luxury cars at 28 per cent GST plus 15 per cent cess

By: | Updated: July 10, 2017 6:17 PM

Hopeful that the government will have a rethink on GST rate on hybrid vehicles, Maruti Suzuki today said it will continue to push the technology in India. The company said it will continue to offer mild hybrid versions of its Ciaz sedan and multi-purpose vehicle Ertiga despite prices of the models going up by over Rs 1 lakh after GST implementation. Under the new tax regime, hybrid vehicles are in the same slab as luxury cars at 28 per cent GST plus 15 per cent cess.At 43 per cent, total tax incidence on these vehicles is higher from the previous effective tax rate of 30.3 per cent. "When we decided to implement hybridisation, it was done with an aim of making vehicles environment-friendly and improve efficiency, not only in India but also globally. That position remains unchanged," Maruti Suzuki India (MSI) Managing Director & CEO Kenichi Ayukawa told PTI. He further said: "Unfortunately, GST doesn't allow hybridisation but we have to continuously communicate with the government". When pointed out to him that already Finance Minister Arun Jaitley has hinted that the tax rate on hybrid cars would not be reviewed, Ayukawa said: "People's opinion sometimes change".

Stressing that "there are some misunderstanding", he said, "I think in the long term hybridisation will contribute to the Indian automobile industry". He said hybrid technology will be the link to the government's ambition to have all full-electric vehicles in India in future. "Those kind of discussions will have to be continued," he said on how to put across the industry's views on hybrid technology and how a lower tax rate will help its adoption. When asked if MSI would stop offering the mild hybrids of Ciaz and Ertiga, Ayukawa ruled out such a step saying SHVS (Smart Hybrid Vehicle by Suzuki) is "good for environment and for customers". "Our Ciaz has 10 per cent more fuel efficiency than the competition, why should we stop selling it?" he asked.

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