GST off to a super-start, collects 92283crore in July

31 August, 2017, 00:52 | Author: Regina Lloyd
  • Higher inflows expected Finance Minister Arun Jaitley said collections are likely to increase with greater compliance

The Union Cabinet today approved a 10% hike in the Goods and Services Tax (GST) cess, applicable on luxury cars and SUVs. However, the latest government move to increase the ceiling on the additional cess on automobiles from 15% to 25% on larger cars and SUVs, is a big disappointment.

He further said that the increased cess is an enabling provision and that the GST Council will decide on actual increase in duties.

Note here, that cess collections needs to be deducted from the figure of Rs 92,283 crore, as it was declared as compensation for states, due to loss in tax revenues after GST implementation.

Central cabinet has approved the ordinance of increasing cess on luxury vehicles to 25%.

The new levy is in addition to taxes on the sale of luxury vehicles. "The Automotive segment has not even settled in, to see the effect of the marginal relief in terms of rationalization of taxes in the GST regime". He added that total number of registrants who have filed their income tax return is 59.57 lakh. It would also see numerous luxury auto markers roll-back their price cuts on their cars due the decline in the tax rate earlier when the GST rate was announced.

After the GST roll out the council in a meeting earlier this month considered the fact that total tax on motor vehicles comprising of GST and compensation cess has dropped in comparison to the pre-GST.

Rohit Suri, managing director for Jaguar Land Rover in India said that since the implementation of GST, demand for luxury cars has been on the rise and a continuation of this would create jobs and enable more investments in local manufacturing. With the increase in cess, the cuts will be reversed.

While all cars attract a peak GST rate of 28 per cent, large motor vehicles, SUVs, mid-segment, large, hybrid cars and hybrid motor vehicles attract a cess of 15 per cent on top of it.

"We have exceeded the target", Finance Minister Arun Jaitley was quoted by the Press Trust of India as saying Tuesday.

"You will have to wait for few more months to study the pattern".

So, to take the tax incidence to pre-GST level, the highest compensation cess rate required is 25 per cent.



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