Large cars, SUVs to be expensive as Cabinet clears GST cess hike ordinance

The proposal before the Cabinet was to hike the cess rate on these cars to 25 per cent.

The Union Cabinet on Wednesday approved an ordinance for raising the goods and services tax (GST) cess on luxury cars and sports utility vehicles to 25 per cent from 15 per cent, Finance Minister Arun Jaitley said.

With this hike, the sport-utility vehicles (SUVs), luxury and midsized cars that had become cheaper after the rollout of GST (Goods and Services Tax) on July 1 are set to cost more.

The new levy is in addition to taxes on the sale of luxury vehicles. Jaitley said goods and services tax (GST) Council will decide on timing of the cess hike.

The proposal before the Cabinet was to hike the cess rate on these cars to 25 per cent.

The GST Council on August 5 had approved raising cess on SUVs, mid-size, large and luxury cars that had become cheaper post GST rollout on July 1.

But raising the cess requires an amendment to the Schedule of Section 8 of the GST (Compensation to a State) Act, 2017.

The GST Council, the apex tax rate setting body under the GST regime, may in its next meeting on September 9 decide on the date when the increased cess will be applicable.

Other Cabinet decisions:

• Two commemorative postage stamps to be issued on the theme Diwali, jointly by India and Canada
• Union Cabinet approves MoU on India-Israel Industrial R&D and Technological Innovation Fund
• Union Cabinet approves India-Brazil MoU for cooperation in Zebu Cattle Genomics and Assisted Reproductive Technologies
• Cabinet approves MoU between India and Myanmar for conservation of earthquake-damaged pagodas at Bagan, Myanmar

(With agency inputs)