GOVT TO HIKE GST CESS ON LARGE CARS VIA ORDINANCE

NEWDELHI: The government is set to promulgate an ordinance within weeks, allowing an increase in goods and services tax (GST) cess on large cars, as it seek store store tax revenue from the automobile industry that unintentionally got affected in the transition to the new regime.

A person privy to discussions in the finance ministry said on the condition of anonymity that a cabinet note is being moved proposing changes to the schedule of cess levied under the GST (Compensation to States) Act ,2017, to correct the reduction in tax burden on cars due to GST roll out.

The GST Council, however, has taken the view that tax rate revisions during the transition to the new tax system that kicked in from July 1 will be limited only to correcting unintentional effects of the tax rate fixing exercise.

The finance ministry on August 7 said the Council chaired by finance minister Arun Jaitley had recommended to the government to move legislative amendments needed for raising the maximum ceiling of cess that can be levied on motor vehicles including sports utility vehicles (S U Vs) to 25% from current 15%.

The move to issue an ordinance suggests the urgency with which the government would like to bring into effect an increase in the cess .“Only after the ordinance has been passed, the Council can decide what should be the quantum of increase needed,” said the person.