GST: Higher cess on mid-sized sedans, luxury cars, sport utility vehicles to be effective today

The increased GST cess on mid-sized, luxury and SUV cars will come into effect from Monday (11 September).

The GST Council on 9 September decided to hike cess on mid-sized cars by 2 percent, taking the effective GST rate to 45 percent.

Representative Image. Maruti.

Representative Image. Maruti.

Also, cess on large cars has been hiked by 5 percent, taking the total GST incidence to 48 percent while that of SUVs by 7 percent to 50 percent.

"Notification regarding increase in the effective rates of the Compensation Cess on specified motor vehicles will be issued on September 11, 2017, effective from 00 hours the same day," the Central Board of Excise and Customs (CBEC) tweeted.

After the GST council meet on Saturday, Finance Minister Arun Jaitley had said that in large vehicles where affordability of consumers is high, the cess has been increased.

"The pre-GST rate has not been restored... Even though we had a headspace of hiking cess by 10 per cent, it has been hiked by up to 7 per cent," Jaitley had said.

Cess on small petrol and diesel cars, hybrid cars and those carrying up to 13 passengers has not been hiked.

Car prices had dropped by up to Rs 3 lakh as the tax rates fixed under the Goods and Services Tax (GST), which came into effect from July 1, were lower than the combined central and state taxes in pre-GST days.

To fix this anomaly, the Council raised the cess.

Under the GST regime, cars attract the highest tax slab of 28 percent and on top of that, a cess is levied.

An ordinance was promulgated last week to hike the cess from 15 percent to up to 25 percent.

The Council on Saturday decided on the quantum of hike in cess in various segments.

The highest pre-GST tax incidence on motor vehicles worked out to about 52-54.72 percent, to which 2.5 percent was added on account of central sales Tax, octroi and the like. Against this, post-GST, the total tax incidence came to 43 percent.

With the revision in cess quantum, now the anomalies have been removed to a greater extent.

Updated Date: Sep 11, 2017 08:13 AM

Also Watch

Watch: Firstpost test rides the new Thunderbird 500X in Goa and walks you through the Royal Enfield Garage Cafe
  • Tuesday, April 17, 2018 Varun Dhawan on Shoojit Sircar's October, 5-star reviews and working with Anushka Sharma in Sui Dhaaga
  • Saturday, April 14, 2018 Ambedkar Jayanti: Re-visiting Babasaheb's ideals exposes fake Dalit politics of Rahul Gandhi and Congress
  • Monday, April 9, 2018 48 hours with Huawei P20 Pro: Triple camera offering is set to redefine smartphone imaging
  • Monday, April 16, 2018 Rajyavardhan Singh Rathore interview: Sports can't be anyone's fiefdom, we need an ecosystem to nurture raw talent

Also See