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The Goods and Services Tax (GST) cess on luxury cars and SUVs will soon be raised to 25 percent from the current 15 percent. The decision to revise the tax rates comes just a month after GST came into effect.
This move to raise the cess came after the GST council realised that the total tax incidence on motor vehicles was lower post GST.
As per the initial GST policy, Cars were to be taxed at 28 percent, with an additional cess ranging from 1 to 15 percent levied depending on vehicle segments. With the revision, Cars and SUVs measuring over four metres long, and with engines larger than 1,200cc (petrol) and 1,500cc (diesel) will attract 25 percent cess.
The GST Council is yet to decide on the date from when the increased cess will be applicable.