The logo of Mahindra and Mahindra is seen at a showroom in Mumbai. (Photo: Reuters)
Investment banking firm Jefferies on Monday said that automobile major Mahindra and Mahindra (M&M) which has a number of "larger UVs (utility vehicles)" in its portfolio, is likely to be impacted the most by the recent decision of the GST Council to hike the cess on luxury cars and SUVs.
"The GST Council hiked cesses on larger cars/SUVs by 2-7%. M&M, which has a number of larger SUVs in its portfolio, is likely to be the most impacted," the investment bank said in a statement.
"The government has again widened the gap in tax rates between smaller and larger PVs, which had narrowed post-GST, to the advantage of incumbents like Maruti. However, the move was widely anticipated and largely priced in - in fact the extent of increase was slightly lower than expected."
The GST Council decided to hike the cess on mid and high-end cars on September 9.
After the Council meeting in Hyderabad on September 9, Union Finance Minister Arun Jaitley said that while status quo has been maintained for small cars (petrol and diesel), hybrid cars and 13-seater vehicles, the GST Council decided to increase the cess rates for some segments.
Consequent to the GST Council's decision, the cess on mid-segment cars has been increased by 2%, for large segment cars it has been increased by 5% and for SUVs by 7%.