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Luxury cars hit a pothole in India (GST Tax)

August 8, 2017

First it was cigarettes that got stubbed; now it's the turn of SUVs to face an endurance test. By becoming a tinkerer's playpen, India's nationwide goods and services tax is emerging as a fresh source of uncertainty for business.

India's GST Council on Monday recommended an additional levy of 10 percentage points on luxury cars and sports utility vehicles, taking the total to 53 percent. The change comes barely five weeks after the value-added tax replaced a plethora of federal and state levies. Last month, a similar bump in cigarette taxes spooked investors.

Imagine yourself at the London headquarters of Fiat Chrysler Automobiles NV. How would you have felt about Indian news reports in July that the Jeep Grand Cherokee, prohibitively priced at $147,000, was now 20 percent cheaper thanks to GST? Good fortune in a growth market? Time to ramp up production? Maybe even use India as a global manufacturing base?

 

read the full article on bloomberg.com

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