An impending hike in the cess under the goods and services tax (GST) regime on luxury cars has prompted Saurabh Deshmukh, a 43-year-old doctor in Mumbai, to book a new car after dithering about the decision for months.
Deshmukh, who owns a seven-year-old Hyundai i10, has now booked a Honda City. There are many like Deshmukh who have advanced their car purchases to beat the sharp price hike expected once the increase in cess is notified.
Auto firms, as a result, are seeing a spurt in bookings. Premium cars and SUVs are likely to see a sharper jump in prices after the new rates comes into effect and are consequently seeing stronger sales ahead of the hike.
The Union government cleared on Wednesday an ordinance to hike the cess on vehicles from 15% to 25%.