The hike of GST – cess on cars (mid-size, hybrid, luxurious) upto a maximum of 25% from 15% is being notified  by the government. Following assent by President Ram Nath Kovind, the government has notified the Goods and Services Tax (Compensation to States) Amendment Ordinance, 2017.

It is effective from 2^nd September, 2017 — the date of official gazette notification.

The amount of cess on each category of cars is not yet confirmed yet but to be decided by the GST Council chaired by Union Finance Minister Arun Jaitley and his state counterparts, in its next meeting on September 9.

Post GST implementations, the prices of the cars were dropped by Rs.3 Lakhs. The hike in cess is said to be brought to rectify the anomaly where rates of certain common use items had gone up but luxury cars were costing less under the new regime.

Along with the said amendment in cess, a new category of vehicle is being added in the Act, where motor vehicles having capacity of upto 13 passangers shall attract 25% cess. The highest pre-GST tax incidence on motor vehicles worked out to about 52—54.72%, to which 2.5% was added on account of Central Sales Tax, octroi etc. Against this, post-GST the total tax incidence came to 43%.

Sources –The Hindu – Business Line

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