The economic scenario in the country has been undergoing huge ups and downs. After demonetization, it’s the ‘Goods & Services Tax’ creating the furore. Individuals operating in various sectors are already aware of GST and paying it at multiple levels. With the central government taking new initiatives and making new revisions every day, it’s high time to know about the latest developments!
Revised rates by the government
The Cabinet and the GST Council have decided to change CESS rates up to 25%. It’s a whopping 10% higher than 15%, which was the initial price. The ‘Section 8 Schedule’ associated with GST ACT, 2017 needs amendment. Ordinances are applied and issued when the Parliament isn’t in the current session. The ordinance should get transferred into a legislation and must get approvals from the Parliament, within 6 months from its date of issuance.
Knowing the details
The new amendment and revision in the cess rates on large vehicles have created a bit of controversy in the motor insurance sector. Prices of large vehicles, SUVs, mid-sized luxury cars had reduced initially. Subsumed interest rates such as VAT, Excise Duty, and Service Tax proved to be highly beneficial. However, all these rates will go up now. Post GST policy rollout, prices for large-sized vehicles had reduced. However, the impacts are going to reverse and change now.
If we go by the present scenario, vehicles and four-wheelers attract the highest tax percentage. It’s right at the top with 28% of GST levied on its purchase. That’s not all; 1 to 15% of taxes are applied to create ‘state compensation corpus.'
Officials speak
It’s here that we need to take a look at what the concerned authorities and government officials have to say. According to them, the pre-GST regime was more expensive for car purchases compared to the post-GST period. The decision to revise and increase cess rates is a significant step towards removing this anomaly. Headed by Mr Arun Jaitley, the Union Finance Minister and dignitaries from all the states of the country, the GST Council decided to move legislations to support the proposal.
The impact of GST on motor vehicle purchase will be felt and understood after it gets implemented. Once the rates get finalised, the Council will sit together to decide a date for launching this policy.
The current scenario
Before the Cess gets approved, potential buyers will have to know about the current scenario. While planning vehicle purchases now, individuals will have to pay 28% GST along with 15% cess rates. However, these rates are applicable for large vehicles, mid-sized cars, and SUVs. If you are investing in diesel-run cars with 1200cc or 1500cc engines, the cess rates will be 3%.
The GST Council just a few days back, i.e., on Sept 9 decided to increase the cess on mid-sized cars by 2-percent, taking the effective GST rate to 45 percent. The council revised cess rate for large cars at 5 percent taking the total GST incidence to 48 percent while for SUVs it changed to 7 % to 50 %.
Final thoughts
Buyers and the common man will surely feel the impact of GST on motor insurance, motor purchase, and servicing. These changes will play a pivotal role and might also affect the dynamics in the motor purchase sector. Buyers should be on their toes and calculate exact amounts while finalising their purchase.