Press Information Bureau
Government of India
Ministry of Finance
30-August-2017 19:40 IST
The Union Cabinet approves promulgation of an Ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017.
The Schedule to the Goods and Service Tax (GST) (Compensation to States) Act 2017, specifies the maximum rate at which Goods and Service Tax Compensation Cess may be collected. In respect of motor vehicles, the maximum rate, at which Goods and Service Tax Compensation Cess may be collected, is 15%.
Consequent to the GST Council’s recommendation, the Cabinet in its meeting on 30th August, 2017 approved promulgation of an ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017, so as to increase the maximum rate, at which the Compensation cess can be levied from 15% to 25% on:
- motor vehicles for transport of not more than thirteen persons, including the driver [falling under sub-headings 8702 10, 8702 20, 8702 30 or 8702 90]; and
- motor vehicles falling under headings 8703.
However, there is no change in the effective rates of Compensation cess [as prescribed vide Notification No. 1/2017-Compencess Cess [Rate] dated 28.06.2017] on specified motor vehicles. The issue regarding the increase in effective rate of Compensation cess on motor vehicles will be examined by the GST Council in due course.
Press Information Bureau
Government of India
Cabinet
30-August-2017 14:53 IST
Cabinet approves promulgation of the Goods and Services Tax (Compensation to States) Ordinance, 2017
The Union Cabinet chaired by Prime Minister Shri Narendra Modi has given its approval to the proposal of the Finance Ministry to promulgate an ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017.
The approval would allow to increase the maximum rate at which the Compensation Cess can be levied from 15% to 25% on:
a) motor vehicles for transport of not more than thirteen persons, including the driver [falling under sub-headings 870210, 8702 20, 8702 30 or 8702 90]; and
b) motor vehicles falling under headings 8703.
The GST Council, in its meeting held in August 2017, taking into consideration the fact that post introduction of GST, the total incidence on motor vehicles [GST+ Compensation Cess] has come down vis-a-vis pre- GST total tax, incidence, and had recommended increase in the maximum rate at which Compensation Cess can be levied on motor vehicles falling under headings 8702 and 8703 from 15% to 25%.
The issue regarding the increase in effective rate of Compensation Cess on motor vehicles will be examined by the GST Council in due course.
