Telangana is a new state, and the burden of high tax on some of the state government projects may pose difficulties in terms of revised estimates and budgets, Rajender said.
Mitra, who is an economist and politician representing All India Trinamool Congress and the current Finance, Commerce & Industries Minister of West Bengal attended the GST Council meeting held at Hyderabad, where more than 20 items were under consideration.
Large cars got an advantage of 8 per cent, but the council hiked cess today by 5 per cent, he said adding SUVs got benefit of 11 per cent post GST, but cess is being hiked by only 7 per cent.
Besides, the TS government, which is hosting a GST Council meeting for the first time, has threatened to move the Supreme Court if it does not approve its demand to reduce the tax on work contracts of projects of public importance to five per cent. The additional GST cess has taken the mojo out of the luxury vehicle segment and has drawn stiff criticism from all luxury carmakers in India.
“It hit millions of small powerlooms as the GST tax structure has been designed only to help integrated plants in this sector”. Even if the rumoured cess hike of 10 percent was not concluded, prices will go up again, which is disappointing. “Though luxury auto industry’s volume contribution is very low, our value wise contribution is much higher and that has enormous potential to grow even more in the future, had there been fair taxation”, Roland Folger, MD & CEO, Mercedes-Benz India said in a statement. It brings the total tax on large cars to 48% from 43% earlier. The rate for custard power could also come down to 18% from 28% as it is used by lower- and middle-income families.
SUVs, on the other hand, will now incur a GST cess of an additional 7%.
The GST Council is likely to keep the overall tax incidence on motor vehicles below 50%, according to the leading news agency.
The date of implementation of the additional cess will be notified later.
Jaitley said businesses can opt for Composition Scheme till September 30 and the council has also allowed businesses to make rectification in transition form TRAN-1 once.
At the end of August itself the Cabinet gave its approval to the Finance Ministry to implement the GST Council’s decision to increase the GST cess on luxury cars.