Structured Infrastructure Cess

By Vijay Kumar

THE following is the content of Paragraph 153 of the Finance Minister's speech while presenting the Budget on 29.02.2016 -

153. The pollution and traffic situation in Indian cities is a matter of concern. I propose to levy an infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.

Clause 159 of the Finance Bill, 2016 read with the Eleventh Schedule provides for imposition of Infrastructure Cess on all goods falling under heading 8703 of the CETA, 1985 at the rate of 4% and this comes into immediate effect on account of the declaration made under the Provisional Collection of Taxes Act, 1931.

The JS (TRU-I) letter F.No. 334/8/2016-TRU dated 29.02.2016 mentions -

4) Infrastructure Cess is being levied on motor vehicles, of heading 8703, as under:

b) Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc - 1%

c) Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc - 2.5%

d) Other higher engine capacity motor vehicles and SUVs and bigger sedans - 4%.

Three wheeled vehicles, Electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons and Motor vehicles cleared as ambulances or registered for use solely as ambulance will be exempt from this Cess.

No credit of this Cess will be available, and credit of no other duty can be utilized for payment of this Infrastructure Cess.

[Please note serial no. (a) has gone missing - MS word to blame!]

Be that as it may, in terms of section 5A(1) of CEA, 1944 read with sub-clause (3) of clause 159 of the Finance Bill, 2016, Notification 1/2016-Infrastructure Cess was issued on 1st March 2016 and the same has prescribed Nil rate as well as rates of 1%, 2.5% to goods falling under heading 87.03 subject to satisfying some conditions against certain entries.

Goods of heading 87.03 not covered within the ambit of any of the ten entries to the notification would attract 4% Infrastructure Cess and these would be diesel driven vehicles of engine capacity exceeding 1500 cc.