GST SET TO LOWER PRICES OF MORE GOODS OF DAILY USE
Council to decide on implementation timeline later
New Delhi, Aug. 7: A number of daily use products ranging from idli/dosa batter to kitchen gas lighter may cost less as the GST Council is considering lowering rates on these items.
Meanwhile, SUVs, midsized, large and luxury cars that had become cheaper after GST rollout on July 1 will cost more as the GST Council has approved a proposal to hike cess on them to 25 per cent, from 15 per cent now. — PTI
New Delhi, Aug. 7: SUVs, mid-sized, large and luxury cars that had become cheaper after GST rollout on July 1 will cost more as the GST Council has approved a proposal to hike cess on them to 25 per cent, from 15 per cent now.
Under the new GST regime, cars attract the top tax rate of 28 per cent. On top of this, a cess of 115 per cent is levied on them to create a corpus to compensate states for loss of revenue from GST implementation.
The finance ministry, in a statement, said that after introduction of GST, the total tax on motor vehicles (GST plus compensation cess) has come down vis-a-vis the total incidence in preGST regime.
“The GST Council considered this issue in its 20th meeting held on August 5 and recommended that the central government may move legislative amendments required for increasing the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 to 25 per cent instead of the present 15 per cent,” the statement read.
The decision on when to raise the actual cess leviable on the same will be taken by the GST Council in due course, it added.
The increase in compensation cess will require amendment to the Schedule to section 8 of the GST (Compensation to a State) Act, 2017.
The vehicles that fall under headings 8702 and 8703 include mid-segment, large cars, SUVs and motor vehicles which can carry more than 10 persons, but less than 13.
Also, hybrid cars with engine capacity of more than 1500 cc and mid segment hybrid cars of less than 1500 cc fall in the category.
The GST Fitment Committee — which is responsible for calculating the tax rates on various goods and services — at its meeting on July 25 felt that the total tax incidence in GST seems to have come down vis-a-vis pre-GST total tax figure.
The highest pre-GST tax incidence on motor vehicles worked out to about 52-54.72 per cent, to which 2.5 per cent was added on account of CST, octroi etc. Against this, post-GST, the total tax incidence came to 43 per cent.
After 28 per cent GST, to maintain the pre-GST tax incidence, the highest compensation cess rate required will have to be 25 per cent, the fitment committee felt. Against this, the ceiling rate of compensation cess on motor vehicles is 15 per cent.
The luxurty vehicles manufacturers hit out at the move to hike cess on large cars and SUVs to 25 per cent, saying it was against the spirit of liberal market dynamics and would affect future plans of expansion under ‘Make in India’ initiative. — PTI
We are highly disappointed with the move as this will be a strong deterrent to growth of luxury cars in the country. As the leading luxury car maker, this will also affect our future plans of expansion here — ROLAND FOLGER, CEO & MD, Mercedes-Benz India We will be forced to reevaluate our business plans in light of this development. This move unfortunately is against the spirit of liberal market dynamics and we can only request to reconsider this proposal. —RAHIL ANSARI, Head, Audi India