Notification No. 06/2017 – Compensation Case (Rate) Updated

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Notification No. 06/2017 - Compensation Cess (Rate): 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.

GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R......(E).- In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 2/2017-Compensation Cess (Rate), dated the 28^thJune, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number

G.S.R. 709 (E), dated the 28^thJune, 2017, namely:-

(a) after serial number 2 and the entries relating thereto, the following serial number and the entries shall be inserted namely:-

(1)	(2)	(3)	(4)
“2A	Leasing of motor vehicles purchased and leased prior to 1^st July 2017	Chapter 99	65percent.of the rate of cess as applicable on supply of similar goods involving transfer of title in goods. Note:- Nothing contained in this entry shall apply on or after 1^stday of July, 2020”.

(Ruchi Bisht)
Under Secretary to the
Government of India

Note: -The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 2/2017 - Compensation Cess (Rate), dated the 28^thJune, 2017, vide number G.S.R. 709 (E), dated the 28^th June, 2017.

📚 Frequently Asked Questions (FAQs): Notification No. 06/2017 - Compensation Cess (Rate)

Q1. What is Notification No. 06/2017-Compensation Cess (Rate)?

Answer: It is an amendment notification issued on 13 October 2017.
The notification amended Notification No. 02/2017 and introduced Entry 2A, providing reduced Compensation Cess for certain vehicle leasing transactions.

Q2. Which notification was amended?

Answer: Notification No. 02/2017-Compensation Cess (Rate).
A new entry relating to leasing of motor vehicles purchased and leased before 1 July 2017 was inserted.

Q3. What was the concessional cess rate?

Answer: The rate was 65% of the Compensation Cess applicable to similar goods involving transfer of title.
The exact effective burden depended on the underlying cess rate applicable to the vehicle.

Q4. Who could benefit from this notification?

Answer: Businesses engaged in leasing motor vehicles purchased and leased before GST implementation.
The concession was intended for transitional situations arising due to GST rollout.

Q5. Was GST reduced under this notification?

Answer: No.
The notification reduced only the Compensation Cess component and did not alter GST rates.

Q6. What is Entry 2A?

Answer: Entry 2A was a new provision inserted into Notification No. 02/2017.
It specifically covered leasing of motor vehicles purchased and leased prior to 1 July 2017.

Q7. Why was the amendment introduced?

Answer: To reduce tax burden during the GST transition period.
The Government wanted to avoid hardship for businesses already operating long-term lease contracts before GST.

Q8. What happened after 1 July 2020?

Answer: The concession ceased to apply.
The notification clearly stated that the entry would not apply on or after 1 July 2020.

Q9. Does the notification apply today?

Answer: No.
The benefit has expired, although the notification remains important for historical GST assessments and litigation.

Q10. What is Chapter 99?

Answer: Chapter 99 is a special classification often used for services under GST-related notifications.
Entry 2A was classified under this chapter.

Q11. How should businesses prove eligibility?

Answer: Through purchase invoices, lease agreements, accounting records, and tax documentation.
Maintaining proper records is crucial during audits.