The Central government has issued notices about GST cess rate hike on mid size and large cars. Hybrid cars fall under the list of increased GST cess as well. The GST cess would be 25% rather than 15% which earlier has been declared.
After the assent of President Ram Nath Kovind the government has issued the notice about the GST cess hike through an ordinance amendment. The union cabinet has approved this ordinance. The PM Modi has headed it. After the approval, the ordinance has been sent to the President.
The ordinance has become effective from 2nd Sept 2017. This is the official gazette notification date. Through this amendment, the tax rate on luxury cars and SUV’s would be at the pre GST era.
However, the cess hike on the variety of cars has not been decided yet. The council would decide the cess rate of the cars. Arun Jaitley would head the council. The decision would be taken in the next GST Council meeting on 9/11.
Right after the implementation of GST, the price of the cars dropped due to the low GST cess rate. However, the GST Council decided to amend the bill in an attempt to rectify the rates which gave rise to the price of certain regular used products while the luxury cars’ price dropped. Following the attempt of rectification the cess rate on luxury cars and SUV’s would be 25%.
Additionally, a brand new category has been added. According to this category, the vehicles which could accommodate 13 people would be taxed at 25%. Before GST implementation the highest tax rate had been maximum 54%. However, after GST tax rate has come to 43%.
Under the GST, the cars would attract a maximum tax rate of 28%. Added to this a cess rate of maximum 25% would be included.