Finance Minister Arun Jaitley has said the government would raise the taxes for mid-sized, large, and sports utility vehicles under the recently unveiled Goods and Services Tax (GST).
The Government has also extended the deadline to file GST returns.
The FM said cess for mid-sized cars would be raised by 2 percentage points while the rate would rise by 5 percentage points for large cars, and 7 percentage points for sport utility vehicles.
“Notification regarding the increase in the effective rates of the compensation cess on specified motor vehicles will be issued on 11 September 2017, effective from 00 hours the same day,” the Central Board of Excise and Customs (CBEC) tweeted.
Cess on small petrol and diesel cars, hybrid cars and those carrying up to 13 passengers has not been hiked. Car prices had dropped by up to Rs3 lakh as the tax rates fixed under the GST, which came into effect from 1 July, were lower than the combined central and state taxes in pre-GST days.
To fix this anomaly, the Council raised the cess. Under the GST regime, cars attract the highest tax slab of 28% and on top of that, a cess is levied. An ordinance was promulgated last week to hike the cess from 15% to up to 25%.
The decision was taken by the GST council of ministers chaired by Jaitley.
At the same time filing categories under certain structures within GST were pushed back until October or November, he said. Most of these returns had initially been due between July and September.