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GST cess reframed to 25 percent for the mid and large cars

GST cess reframed to 25 percent for the mid and large cars

Snapshot: The new additional tax will see a hike in the prices of some of the affordable cars like Hyundai Verna, Honda City and Maruti Suzuki Ciaz, which do not fall into the luxury category.

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The government of India has officially announced the rise in the additional cess for the mid-size and large luxury cars to a maximum of 25 percent, which was earlier 15 percent after the GST implementation.

With the consent from President Ram Nath Kovind, the Goods and Services Tax Amendment Ordinance, 2017 was brought into effect from September 2nd, 2017. It was earlier approved by the Union Cabinet, headed by Prime Minister Narendra Modi. With this amendment, the prices of the mid-sized SUVs and luxury vehicles are expected to be brought at par with that prior to GST.

GST (Goods and Service Tax) was brought into effect on 1st July this year and this attracted a standard tax of 28 percent on all the cars with an additional cess of 15 percent. This imposed a total of 43 percent cess on all the cars from various segments, whether it be a small SUV or any other luxury car. This tax system witnessed a sink in the prices of the luxury cars by Rs. 3 lakh, whereas the small and medium ones, did not receive any significant benefit. So, the government took the initiative to rectify this exception, where prices of daily use items are increasing but prices of luxury things have decreased. However, the GST Council chaired by Union Finance Minister Arun Jaitley is expected to decide on the hike in taxes for each variety of cars on September 9th.

Apart from the standard 28 percent GST, the additional tax of 25 percent will increase the taxes of the mid-sized SUVs and luxury cars to 53 percent. It will also result in the hike in the prices of some of the affordable cars like Hyundai Verna, Honda City and Maruti Suzuki Ciaz, which do not fall into the luxury category. Besides, vehicles with the capacity of 13 occupants will also fall into the category of 25 percent additional tax.

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