The Union Cabinet on Wednesday approved an ordinance that makes almost all cars costlier. The proposal will hike the Goods and Services Tax cess on mid-size, large cars and SUVs from the current 15% to 25%. This is in addition to the taxes on the sale of luxury vehicles, Finance Minister Arun Jaitley said.

The GST Council is likely to decide the date of implementation of the increased cess during its next meeting on September 9, PTI reported. The government will eventually have to amend the GST (Compensation to a State) Act, 2017 to raise the cess.

Under the Goods and Services Tax, which came into effect on July 1, small petrol cars with an engine capacity of less than 1200 cc attracted 1% cess. Those with a diesel engine capacity of less than 1500 cc were charged a 3% cess. Meanwhile, big cars with an engine capacity more than 1500 cc, and SUVs that are more than 4 m long and engine capacity of over 1500 cc, attracted 15%.