Infrastructure Cess to Be Eventually Included in GST

Ram Tirath Member (Budget), Central Board of Excise and Customs, said, "Cesses have been imposed with specific purposes. The government needs revenue. Once the Goods and Services Tax comes to play, hopefully by April 2017, all these taxes will be subsumed."

While the Krishi Kalyan Cess aims to aid farmers and agriculture, the proposed infrastructure cess was announced as a measure to help the government deal with the troubling condition of pollution and traffic in the country. Under the infra cess, small petrol, LPG, and CNG cars will pay 1 per cent infrastructure cess, diesel cars not exceeding 4m in length and with engine capacity of up to 1500cc will pay 2.5 per cent. Furthermore, 4 per cent will be imposed vehicles with higher engine capacity and SUVs.

As a result, several manufacturers including Maruti Suzuki, Hyundai, Honda, Tata Motors, and Mercedes-Benz have already announced a price hike across their respective range of vehicles in India.

Also Read: Budget 2016: Woes For Passenger Vehicle Industry