The Union Cabinet on Wednesday approved promulgation of an ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017.
The approval will allow increasing the maximum rate at which the Compensation Cess can be levied from 15% to 25%.
The increased cess would be levied on: Motor vehicles for transport of not more than thirteen people, including the driver falling under sub-headings 8702 10, 8702 20, 8702 30 or 8702 90 and Motor vehicles falling under headings 8703.
The GST Council in its meeting held in August considered the fact after introduction of GST, the total tax on motor vehicles (GST + Compensation Cess) has come down vis-a-vis pre-GST total tax and recommended the increase as above.
The issue regarding the increase in effective rate of Compensation Cess on motor vehicles will be examined by the GST Council in due course.