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Cabinet Clears Ordinance on Compensation Cess Hike

KalingaTV News Network

New Delhi:  The Union Cabinet on Wednesday cleared an ordinance to increase the compensation cess on mid and large sized cars and SUVs to 25% from 15%.

Finance Minister Arun Jaitley said it is an enabling option and it is up to the GST council to decide on the quantum of the hike within the 25% cap.

The next GST council meet is scheduled on September 9 and the council will take up the issue then.Once the law is amended by the Centre, the GST Council will decide when the GST cess will be applicable.

Earlier, the cess on cars stood at 1 percent, 3 percent and 15 percent depending on the engine capacity and length.Large cars with an engine capacity higher than 1500 cc and SUVs with a length of over four meters & engine capacity greater than 1500 cc had an additional cess of 15%, but now the cess has been increased by 10%.

The total tax incidence, including the compensation cess on luxury cars and SUVs, had gone under the GST structure and the Finance Ministry had considered the issue. Earlier, an official release from the Finance Ministry had stated that the GST Council held on August 5 recommended that the Center move legislative amendments required for increasing the cap on cess charged on vehicles under the label 8702 and 8703 to 25% instead of the existing 15%.