Cess On Caffeinated Beverages And Motor Vehicles

The Ministry of Finance has announced on 30

th September 2019, that few amendments are made to Section 8 of the Goods and Services Tax Act 2017.

Caffeinated Beverages

The Central Government has made some of the following changes in the compensation Cess rate on Caffeinated Beverages and Motor Vehicles.

The 1 (GST) has increased the producer charges on caffeinated beverages to 28% from 18% and also 12% cess is imposed on it. (Cess is referred to as a tax on tax charged by the government for any of the specific purposes.)
This increase in charges has an impact on caffeinated drinks like Red bull, Coca-Cola’s Monster, and Thumbs Up.
The GST revision on caffeinated drinks or energy drinks has brought with face to equal with soft drinks.
Thumbs Up, which was charged in the middle of the year 2018, has more than 150 parts per million caffeine content present in it.

Motor Vehicles

The motor vehicles of length that do not exceed 4000 mm, are:

Petrol, Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven vehicles which has an engine capacity limited to 1200 cc.
Diesel driven vehicles should have an engine capacity of a maximum 1500 cc.

The relief offered to automobile producers is on cess of large passenger vehicles that can carry 10 to 13 persons. The cess on such vehicles is reduced from 15% over and above the 28% GST rate, to 1% for petrol vehicles of certain specifications and 3% for diesel vehicles. People with an orthopaedic physical disability can use the

Motor vehicles mentioned in the following entry in accordance with the guidelines.

An officer who is in a rank of Deputy Secretary to the Government of India in the Department of Heavy Industries gives a certificate that, people with orthopaedic physical disability also can use the mentioned goods.

In S.No. 50 entry in column (2), the entry “8702, 8703 21 or 8703 22”, has been substituted. (which includes Motor vehicles of LPG and CNG which does not exceed 1200cc)
In S. No. 51 entry in column (2), the given entry “8702, 8703 31”, has been substituted. (which includes diesel driven motor vehicles of engine capacity to the maximum of 1500 cc only)

All the above notification has come to effect from 1

st of October, 2019. The notification is provided below:

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Frequently Asked Questions

Common questions about Cess Changes: Caffeinated Beverages & Motor Vehicles.

The government has increased the cess on caffeinated beverages to bring them at par with soft drinks in terms of taxation. This move aims to impose a higher tax on caffeinated drinks, which are often considered unhealthy, similar to the existing tax rates on sugary soft drinks.

The increased cess of 28% GST and an additional 12% cess applies to popular caffeinated beverages like Red Bull, Coca-Cola's Monster, and Thumbs Up, which contains more than 150 parts per million of caffeine.

The government has reduced the cess on large passenger vehicles that can carry 10 to 13 persons. The cess has been lowered to 1% for petrol vehicles and 3% for diesel vehicles, over and above the 28% GST rate, providing relief to automobile manufacturers.

For petrol, liquefied petroleum gas (LPG), or compressed natural gas (CNG) driven vehicles, the engine capacity should not exceed 1200 cc. For diesel-driven vehicles, the engine capacity should not exceed 1500 cc to qualify for the reduced cess rates.

Yes, the notification allows people with orthopaedic physical disabilities to use the motor vehicles mentioned in the entries S.No. 50 and S.No. 51, which include petrol, LPG, CNG, and diesel vehicles within the specified engine capacity limits, subject to obtaining a certificate from the designated authority.

The revised cess rates on caffeinated beverages and motor vehicles came into effect from October 1, 2019, as per the notification issued by the Ministry of Finance.

A cess is an additional tax imposed by the government on specific goods or services for specific purposes, such as compensating states for revenue losses or funding particular initiatives or projects.

The increased cess on caffeinated beverages is likely to result in higher prices for consumers. Conversely, the reduced cess on certain motor vehicles may lead to lower prices or provide some relief to buyers of eligible vehicles.

Yes, the notification mentions that an officer with the rank of Deputy Secretary to the Government of India in the Department of Heavy Industries can issue a certificate allowing people with orthopaedic physical disabilities to use the motor vehicles specified in the entries S.No. 50 and S.No. 51.

The notification specifies the reduced cess rates for motor vehicles with a length not exceeding 4000 mm, which typically refers to passenger vehicles like sedans, hatchbacks, and compact SUVs, as opposed to larger vehicles like buses or trucks.