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The Central Government has withdrawn the cess on Goods and Services Tax (GST) on automobiles.
Earlier the government had fixed the GST for cars and motorcycles at 28 percent with cess of 1 to 3 percent. Through the Taxation Laws Amendment Act 2017, The Industries (Development and Regulation) Act 1951 - cess on automobiles (cars and motorcycles) will no longer be applicable.
Small petrol cars with engine capacity of 1,200cc or less will be charged with an additional 1 percent cess. As for diesel vehicles with engine capacity of 1,500cc or less, will attract 3 percent additional cess.
Motorcycles attracted 28 percent GST and cess of 3 percent on bikes with engine capacity more than 350cc. Beginning July 1, 2017, cess on both cars and motorcycles has been abolished and only 28 percent GST will be applicable.
The Central Government has taken this step to ensure a smooth roll out of Goods and Service Tax. The government has taken this step in stages by eliminating various cesses so that it is easier to fit in different goods and services in various tax slabs for GST.
Many of the industry experts believe that the implementation of the additional cess in the entry-level segment will result in hindering the growth of the country as a production hub for small cars.