Seeks to amend notification No. 2/2017-Compensation Cess (Rate) regarding reduction in cess rates for leasing of motor vehicles purchased and leased prior to 01.07.2017.

Amendment to Compensation Cess Notification for Leasing of Motor Vehicles

The Government of India, under the Ministry of Finance, has issued Notification No. 6/2017 regarding amendments to the compensation cess rates as per the Goods and Services Tax (Compensation to States) Act, 2017. This notification, dated October 13, 2017, introduces changes to a prior notification (No. 2/2017-Compensation Cess (Rate), dated the 28th June, 2017), under the recommendations of the GST Council.

A new entry, numbered "2A," has been added to address the leasing of motor vehicles that were purchased and leased before July 1, 2017. This entry specifies that such leasing activities will incur a cess at 65% of the rate applicable to the supply of similar goods involving the transfer of title in goods. Importantly, this provision is set to expire on July 1, 2020, after which it will no longer apply.

This amendment is part of the government's efforts to clarify and adjust the tax implications of leasing motor vehicles under the GST regime. The notification was published in the Gazette of India and is part of ongoing adjustments to the GST framework to ensure clarity and compliance.