New Delhi, Aug 31 (KNN) The Union Cabinet on Wednesday approved promulgation of an Ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017 which specifies the maximum rate at which GST Compensation Cess may be collected.

In respect of motor vehicles, the maximum rate, at which Goods and Service Tax Compensation Cess may be collected, is 15%, the Finance Ministry said. 

Consequent to the GST Council’s recommendation, the Cabinet in its meeting on 30th August, 2017 approved promulgation of an ordinance to suitably amend the Goods and Services Tax (Compensation to States) Act, 2017, so as to increase the maximum rate, at which the Compensation cess can be levied from 15% to 25% on motor vehicles for transport of not more than thirteen persons, including the driver [falling under sub-headings 8702 10, 8702 20, 8702 30 or 8702 90]; and motor vehicles falling under headings 8703. 

However, the Ministry added that there is no change in the effective rates of Compensation cess [as prescribed vide Notification No. 1/2017-Compencess Cess [Rate] dated 28.06.2017] on specified motor vehicles.

The issue regarding the increase in effective rate of Compensation cess on motor vehicles will be examined by the GST Council in due course.