New Delhi: The Cabinet on Wednesday approved raising a levy on luxury cars and sports utility vehicles to 25 per cent from 15 per cent,now under the new GST regime.
The new levy is in addition to taxes on the sale of luxury vehicles.
The GST Council had on August 5 approved raising cess on SUVs, mid-size, large and luxury cars that had become cheaper post GST rollout on July 1.
But raising the cess requires an amendment to the Schedule of section 8 of the GST (Compensation to a State) Act, 2017.
Under GST, a cess was levied on demerit goods like cars, tobacco, and coal to create a corpus for compensating states for any loss of revenue from their taxes like VAT being unified with central levies like excise duty and service tax in the GST.
Cars attract the top tax rate of 28 percent. On top of this, a cess of 1 to 15 percent is levied for the creation of the state compensation corpus.
The GST Council, the apex tax rate setting body under the Goods and Services Tax (GST) regime, may in its next meeting on September 9 decide on the date when the increased cess will be applicable.