Government notifies increase in cess ranging from 2-7% on motor vehicles

NEW DELHI: The government has notified the increase in cess ranging from 2-7% on motor vehicles.

The cess comes into effect from Sunday midnight.

Cess on mid-sized cars would go up by 2% to 17%, taking the total tax incidence to 45% from 43% now (28% GST + 17% cess). For large cars total tax incidence has gone to 48% from 43% on the back of 5% increase in cess to 20%. Total tax incidence on SUVs goes up to 50% with a 7% increase in cess(28% gst+22% cess).

The GST Council, which is the apex decision making body for the new tax, had on Saturday finalised a graded increase in cess depending on the segment to soften the blow for industry.

There will be no change in cess rate for hybrids and 13-seater vehicles as also small cars--200 cc petrol and 1500 cc diesel.

Industry had represented to the government after the GST Council's decision to raise cess to 25% from 15% to bring parity between total tax incidence pre-GST as well as post-GST. Industry had passed on the reduction in tax incidence and cut prices especially on large cars and SUVs.