Luxury cars are often under scrutiny for being extravagant purchases, which has resulted in the cars attracting the highest taxation. However, Jaguar Land Rover India's President and Managing Director, Rohit Suri believes that the government should stop classifying luxury cars as sin goods and reduce the tax burden on such vehicles. In a statement made to PTI, the JLR India boss said that taxes should be reduced on luxury vehicles since manufacturers contribute healthily to the country's economic growth.
Rohit Suri said, "The government calls it (luxury vehicles) sin goods. This does not allow the market to grow. We can't understand how it is a sin-good. I can understand something which impacts your health like cigarettes but does driving a car impact your health? If you classify this (luxury vehicles) as sin goods then there are ten more goods like wearing expensive shirts or shoes, which are also sin...In that case, every five-star hotel should be sin and people going there should be called sinners."
Currently, luxury vehicles in India attract the highest slab GST of 28 per cent and additional cess of 20 per cent on sedans and 22 per cent on SUVs. That's a steep amount and drives up the purchase cost of the vehicle by a significant margin. Suri's comments come at a time when the auto industry is struggling to improve its sales over the past couple of months. Most manufacturers have requested or are in favour of reducing taxes on cars and two-wheelers in a bid to drive growth.
Adding further, Suri said, "We employ around 2,400 people. We give employment to people across our value chain. If the market remains restricted then we are going to be handicapped. The market size is small, all because of the high GST rate that the government continues to apply."
The reports suggests that the Indian luxury car market is about 40,000 units annually, of which Jaguar Land Rover's model range competes in a segment of around 27,000 units.
"We are very keen, we are hoping that the government will stop calling us sin goods. Do you want to stop the growth of the industry by classifying it as sin goods? It is something we are clearly not happy with the way it is being branded," he said.