GST on Cars

The cabinet may increase the cess charges from 15 per cent to 25 per cent on mid-size, large cars, and SUVs under the current GST regime. Cars are already attracting 28 per cent tax rate, and on top of this, a cess of 1 to 15 per cent is being imposed. However, the views of ministers of roads, transport, and highways would be taken into consideration before making a final decision.

The apex tax rate setting body, the GST Council has approved the increase of cess on SUVs, midsize, large and luxury cars that became cheaper after the implementation of GST since July 1st.

As reported by the Times of India, speaking on this development, an official said that after the introduction of GST, the total tax on the motor vehicles has come down compared to that of the total tax incidence in the pre-GST era.

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In order to rectify this anomaly, the GST Council that is headed by the Union Finance Minister Arun Jaitley and the comprising of representatives of all the states, had a meet on August 5th and recommended that the Central government moves the legislative amendments that are required to increase the maximum ceiling of cess leviable on the motor vehicles to 25 per cent from 15 per cent.

The large motor vehicles, SUVs, mid-segment cars, large cars, hybrid cars and hybrid motor vehicles attract a cess charge of 15 per cent above the 28 per cent GST.

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