NEW DELHI: The Union cabinet today cleared the government proposal for an ordinance to increase the State Compensation Cess limit under GST from 15% to 25% on Automobiles.
The decision of Union Cabinet has not gone well among the automobile manufacturers. Similarly, the apex body, Society of Indian Automobile Manufacturers (SIAM) sees it as an unfortunate decision for the automakers.
SIAM in a press statement said, “The cabinet clearance of the Government proposal for an ordinance to increase the State Compensation Cess limit under GST from 15% to 25% on Automobiles is an unfortunate decision. Although the clearance of the ordinance is just an enabling clause for the GST Council to be able to increase the cess but it is clearly evident that the Government’s intention is to increase the overall tax burden on many different categories of vehicles. This will increase the post GST price of many vehicle categories from Pre-GST level and have a negative impact on the sale of such vehicle models in the market.”
Earlier when the prescribed GST rates were implemented the automakers reduced the prices by upto Rs 7 lakhs of thier respective models.
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The apex body also said that, “This is contradictory position of the Government that while on the one hand it has identified the automotive industry as a sunrise sector of Indian economy, on the other hand it is being treated as a demerit product.SIAM would like to underline that all the vehicles that were attracting 24% or 27% excise duty in Pre-GST regime may potentially attract higher tax under the GST regime because of this decision. The hike in total tax could be as high as 10% in some cases. SIAM requests Government and GST Council to reconsider increasing GST Compensation Cess on any category of vehicles in keeping with the promise of moderating the extremely high levels of taxation in the pre-GST regime.”