The Narendra Modi government is likely to promulgate an ordinance as early as this week to increase ceiling on cess to 25 per cent from the present 15 per cent over the peak rate of 28 per cent goods and services tax (GST) on luxury cars and sports utility vehicles (SUVs).
The ordinance will amend the Schedule to Section 8 of the GST (Compensation to States) Act, 2017, for the cess to be increased. Business Standard has learnt from senior government officials that the ordinance has been drafted and has been checked by Finance Minister Arun Jaitley’s office.
It is expected to be available for President Ram Nath Kovind’s consideration very soon, said an official. This could happen as early as the current week. The ordinance has to be then ratified by Parliament in the upcoming winter session.
Earlier, the Council had also raised the cess on cigarettes when it was found that the rates under the GST system were lower than the older taxation system of excise duty and state-level value-added tax.
Prices of most such vehicles had turned significantly cheaper in most states following the introduction of the GST on July 1. Toyota’s Fortuner had turned cheaper by Rs 2.17 lakh and the Innova by Rs 1 lakh. Most luxury cars had also turned cheaper by as much as 8-10 per cent in many states.