The government is taking an enabling step to hike the maximum cap on compensation cess for cars. However, the Centre has said that it is not in favour of hiking cess on small cars, a move which is likely to bring cheers to the small carmakers like Maruti Suzuki and Hyundai.
The Centre is not in favour of hiking compensation cess for the small car segment, as per the government officials.
GST Council has recommended hiking the cap on cess of SUVs, mid-sized and luxury cars from 15 percent to 25 percent. The Centre will have to amend the GST (Compensation to State) Act, 2017 to increase the maximum ceiling of cess on big cars, the finance ministry said.
With the Parliament session ending next week, one needs to watch whether government will bring an ordinance to amend the cap.
Mahender Singh, Member-GST, CBEC told CNBC-TV18 that rationalisation of rates is nothing new and that it keeps happening all the time and this is a major part of the annual Budget making. Rates keep on coming up and down and there is nothing wrong about it, he said.
The main purpose of the government is to see that the rates are practical, said Singh.
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