Passenger car taxation in India: shifting to an emissions-linked structure
After the Goods and Services Tax (GST), the GST cess is the second largest pool of taxes collected on passenger cars in India. This paper uses sales data for fiscal year (FY) 2020–21 to analyze the impact of three different GST cess structures: a baseline scenario in which the cess is not directly linked to carbon dioxide (CO2) emissions; an emissions-linked GST cess structure as proposed under the draft National Auto Policy (NAP), 2018; and a hypothetical continuous linear function for an emissions-linked GST cess.
