The Central Government today amended its earlier notification dated 28.06.2017 which levies 15% GST Compensation cess on motor vehicles for the transport of 10 or more persons, including the driver. As per the amended version the cess is applicable to motor vehicles transporting up to 13 persons.
Earlier, the decision to levy cess of 15% over and above the GST rate of 28% on buses had criticized largely since this would result in putting public transport vehicles in the same tax bracket as luxury cars and hybrid vehicles. The cess was likely to increase prices of buses and may hamper public transport as the overall tax incidence on such vehicles would come to 43%. Such buses currently attract a total tax of 27.8%.
The current notification, however, is a major relief to the people and the public transportation system.
Earlier, the GST council has fixed 43% tax (28% GST plus 15% cess) on hybrid cars, a rate that industry felt was too high for the fuel efficient vehicles. The automakers in their demand to the GST Council had asked it to reduce the tax rate on hybrid vehicles to 18%, arguing that they are much more efficient and eco- friendly but require scale and volume to become economically viable.
Read the Full Text of the Notification Here
