The recently concluded GST Council has brought a mixed opinion on the increase of GST for car seats. The increase in rates was announced by the Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman. As per the meeting, car seats, which attracted 18% GST, will now attract 28% GST.
As per the official statement:
- To clarify that car seats are classifiable under 9401 and attract a GST rate of 18%.
- GST rate on car seats classifiable under 9401 to be increased from 18% to 28%. This uniform rate of 28% will be applicable prospectively for car seats of motor cars in order to bring parity with seats of motorcycles which already attract a GST rate of 28%.
The proposed scheme will bring the extra tax on car seats in line with motorcycle seats, which were already subjected to 28% GST. Experts say this is a welcome move as it avoids unwarranted litigation.
As per Madhava Yathigiri, Partner, Deloitte India, “The recommendation to increase the rate of GST prospectively on car seats from 18% to 28% is to bring the parity with seats of motorcycles, which is largely revenue neutral. Further, there have been disputes with respect to the classification of car seats by the GST authorities in the past where high-value demands were raised by applying a GST rate of 28%. The clarification that has been now proposed by GST council for the past period is a welcome relief and will avoid unwarranted litigation.”
