President Ram Nath Kovind passes rule to increase GST cess on motor vehicles

Increase of GST cess on motor vehicles had been in discussion between the GST Council and Finance Ministry for some time now. But the final word was not made public by the GST Council and other authorities related to this Goods and Services Taxes. It was recently when we reported to you that people in cabinet are discussing increase of GST cess on luxury cars but the final decision would be taken up by President and GST Council.

GST cess on luxury cars

During implementation of GST there was no change in GST charges on small cars however there was change in GST on luxury cars. And this list included large to mid – sized cars. This was the reason for making of an ordinance so that all things turn equal. As a result of bringing GST in to effect prices of high end cars came down or decreased.

This led to win – win situation for many people such as manufacturers and consumers (or buyers). But with changing conditions the Government of India plans to go along with ordinance route. In this way Indian Government can make modifications in GST Compensation Cess Law.

Agreement of President Ram Nath Kovind for GST cess hike

When talks and ordinance of increase in GST cess on luxury vehicles, mid to large – size cars reached President Kovind he agreed to pass this ordinance. As a result even President of India, Prez Ram Nath Kovind cleared ordinance so that GST Compensation Cess on selective category of cars increases.

Know how to register under GST if you did not complete GST registration process.

GST cess increase from 15 % to 25 %

This hike in cess is said to be from 15 % to 25 % and it will be applicable only on cars under the new Goods and Services Taxes regime. On other hand cars that come under this rule will be sports utility, luxury and the large cars.

There will not be any variations in cess (GST cess) for the smaller end of cars. It was on 30 August 2017 that Union Cabinet approved this ordinance but it is still waiting for final decision to be taken by concerned authorities.

9th September 2017, GST cess decision

GST Council will take decision on GST Compensation Cess on luxury cars on 9 September 2017. Till then authorities are checking all possibilities regarding effects of this increase in cess. Like you know car manufacturers had dropped prices of car up to Rs. 3 lakh and all this was due to Goods and Services Tax that came up in India.

Cars such as SUVs, large cars, hybrid motor vehicles, mid – segment cars or other large motor vehicles have cess of 15 % apart from 28 % GST. However in future this cess percentage increases to 25 % along with 28 % GST.

New GST rules

There are some more GST rules that you should know. One of them is that there is new category in GST Act which says that there will be 25 % cess if vehicles have seating capacity of 13 people. After meeting of GST Council on 9 September we will understand what is GST cess on luxury vehicles.

Also learn about GST returns and types of GST returns in another article.

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