25% cess on mid-size, luxury cars

The Union Cabinet on Wednesday cleared an ordinance to hike the cess to 25% on all vehicles which until now attracted a cess of 15%.

The move will increase the prices across the segments from mid-size cars to SUVs and luxury vehicles.

Briefing reporters, Finance Minister Arun Jaitley said the hikes were not across the board, but further clarification from the revenue officials suggested all vehicles which attracted 15% cess post GST will now come under 25%.

At present, most of the mid-segment cars, large vehicles, SUVs and even hybrid cars attract 15% cess over and above 28% tax. Cars smaller than four metre with petrol engine attract 1% cess, with diesel engine the cess is 3%.

The date for implementing the hike in the cess may be decided by the GST Council when it meets in Hyderabad on September 9.

“It is only an attempt to restore prices of those luxury vehicles which had become cheaper after GST regime. The objective of a taxation policy cannot be to make luxury items cheaper and essential commodities costlier,” Jaitley said.