Govt Keen on Swift Up­date of Law to Hike Cess on Big Cars

Likely to is­sue or­di­nance if Bill not in­tro­duced in cur­rent ses­sion, may seek GST Coun­cil’s nod as soon as pos­si­ble

The Economic Times - - Economy: Macro, Micro & More - @times­group.com

New Delhi: Hav­ing se­cured the Goods and Ser­vices Tax (GST) Coun­cil’s en­dorse­ment, the gov­ern­ment wants to swiftly amend the law in the on­go­ing Par­lia­ment ses­sion it­self to raise cess on mid-size, large cars and SUVs.

If it is un­able to move the amend­ment this ses­sion, an or­di­nance will be is­sued, an of­fi­cial told ET.

“Coun­cil has al­ready taken a call on the cess,” the of­fi­cial said. “At­tempt now would be to move the en­abling amend­ment soon.” The gov­ern­ment could seek the GST Coun­cil’s nod as soon as the en­abling pro­vi­sion is in place to quickly raise the cess. The GST Coun­cil had on Sat­ur­day em­pow­ered the Cen­tre to raise the cess to 25% from 15% now for cer­tain types of ve­hi­cles. ET re­ported the de­ci­sion on Mon­day.

The higher cess could lift prices of even mid-sized se- com­mended 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% in­stead of the present 15%,” the fi­nance min­istry said in a re­lease on Mon­day. The de­ci­sion on when to raise the cess will be taken by the GST Coun­cil in due course, it said.

The to­tal tax on mo­tor ve­hi­cles (GST plus com­pen­sa­tion cess) has dropped from what it was be­fore the levy was rolled out on July, the min­istry said. An in­crease in cess will help the gov­ern­ment raise rev­enue to pay com­pen­sa­tion to the states for any rev­enue loss due to GST. The in­crease in com­pen­sa­tion cess will re­quire amend­ments 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, rac­ing cars, SUVs and mo­tor ve­hi­cles that can carry more than 10 per­sons, but less than 13 such as sta­tion wag­ons. Also, hy­brid ve­hi­cles with en­gine ca­pac­ity of more than 1,500 cc and mid-seg­ment hy­brid cars of less than 1,500 cc fall in the cat­e­gory. Un­der the new GST regime, cars have been put in the high­est tax bracket of 28%. Be­sides, a cess rang­ing from 1% to 15% is levied to cre­ate a cor­pus to com­pen­sate states for loss of rev­enue from GST im­ple­men­ta­tion.

Higher cess could lift prices of even mid-sized sedans as it will ap­ply to cars of over 4 m in length and 1,500-cc en­gine ca­pac­ity

far this sea­son is

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