GST cess on luxury cars increases to 25%, LS gives approval to the bill.

The bill to increase the GST cess on luxury car to 25% (from the original 15%) has been given approval by the Lok Sabha. This bill is expected to increase the funds to the center and the compensation to the states for the revenue loss due to the earlier rollout of the GST.

Looking into the steep decline in the prices of the premium cars due to earlier GST rollout in July 2017, which resulted in a revenue drop for the states, the government recommended to increase the cess on them. The revenue of the states dropped by around 9-11% due to GST rollout, hence this move is seen as to compensate for the revenue loss of the states, bringing it back to pre-GST era.

GST council looked into the revenue for each state and recommended the hike in cess to 25%. Now the Lok Sabha has also given an approval for the revision in tax structure. However, the final revised tax structure will only be applicable once the law is amended.

So if you are looking to buy a car, this is the best time to do.