The Finance Minister, Arun Jaitley, on Friday introduced in the Lok Sabha a new Bill that seeks to replace the recent GST compensation cess hike ordinance on certain motor vehicles.
It may be recalled that an ordinance — Goods and Services Tax (Compensation to States) Amendment Ordinance 2017— was promulgated on September 2 this year to peg the maximum rate for compensation cess at 25 per cent for motor vehicles falling under heading 8702 and 8703 of the Customs Tariff Act. The maximum compensation cess for such vehicles were earlier pegged at 15 per cent.
Currently, motor vehicles (except electric vehicles) attract 28 per cent GST. Electric vehicles attract concessional 12 per cent GST rate. In addition, certain specified motor vehicles attract GST compensation cess at different rates.
The Goods and Services Tax Council had at its 20th meeting on August 5 recommended an increase of 10 percentage points (from 15 per cent to 25 per cent) in the maximum rate at which compensation cess may be collected on motor vehicles falling under heading 8702 and 8703 of the Customs Tariff Act.