The government has notified hike in GST cess on a range of cars from mid-size to hybrid variant to luxury ones to a maximum of 25 per cent, from earlier 15 per cent.
Following assent by President Ram Nath Kovind, the government has notified the GST (Compensation to states) amendment ordinance, 2017. The ordinance was recently approved by the Union Cabinet, headed by Prime Minister Narendra Modi, and was sent to the President for his approval.
It has come into force with effect from September 2 -- the date of official gazette notification. With this amendment, taxation on luxury, SUV and other vehicles would be brought at par with that prevailing pre-GST rollout.
However, the quantum of cess hike in each variety of car would be decided by the GST council, chaired by Union Finance Minister Arun Jaitley and his state counterparts, in its next meeting on September 9.
Car prices had dropped by up to Rs 3 lakh following the implementation of the GST from July 1 and the ordinance is being seen as an attempt to rectify the anomaly where rates of certain common use items had gone up but luxury cars were costing less under the new regime.
Large motor vehicles, SUVs, mid-segment cars, large cars, hybrid cars and hybrid motor vehicles attract a cess of 15 per cent on top of 28 per cent GST. This cess has been hiked to up to 25 per cent now.