The prices of Ciaz, Ertiga diesel cars with mild hybrid technology has been raised by over Rs 1 lakh and will be effective from today.
Earlier, the automakers had asked the government to lower tax on hybrid cars. The government, however, did not accept the demand.
The GST council has fixed 43 per cent tax (28 per cent GST plus 15 per cent cess) on hybrid cars, a rate that industry felt was too high for the fuel efficient vehicles.
The automakers in their demand to the GST Council had asked it to reduce the tax rate on hybrid vehicles to 18 per cent, arguing that they are much more efficient and eco- friendly but require scale and volume to become economically viable.
As per the proposed rates under the GST regime, hybrid vehicles have been put in the same category as big petrol and diesel luxury cars attracting 28 per cent rate with a cess of 15 per cent.
The tax incidence on hybrid vehicles will go up to 43 per cent from the current effective tax rate of 30.3 per cent.
At present, hybrid vehicles attract excise duty of 12.5 per cent, similar to entry-level small cars such as Tata Nano or Maruti Alto.
(With PTI inputs)