GST CESS
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Context
- The Union government has capped the maximum rate of GST compensation cess that would be levied on pan masala, cigarettes and other forms of tobacco.
- The capping of the cess rate was brought in as part of the amendments to the Finance Bill, 2023.
Read all about GST Compensation Cess:
Background
- The GST Council in February 2023 approved the report of a panel of State Finance Ministers on plugging tax evasion in pan masala and gutkha businesses.
- The GoM had recommended that the mechanism for levy of compensation cess on pan masala and chewing tobacco be changed from ad valorem to a specific rate-based levy to boost the first stage collection of the revenue.
Amendment Details
- As per the amendment, the maximum GST compensation cess rate for pan masala will be 51% of the retail sale price per unit.
- In the current regime, the cess is charged at 135% ad valorem [according to the estimated value of the goods being taxed].
- The rate for tobacco has been fixed at ₹4,170 per thousand sticks plus 290% ad valorem or 100% of the retail sale price per unit. So far, the highest rate was ₹4,170 per thousand sticks plus 290% ad valorem.
- The cess is levied over and above the highest Goods and Services Tax (GST) rate of 28%.
Read all about GST Council: https://iasgyan.in/daily-current-affairs/gst-council-35
PRELIMS PRACTICE QUESTION Q. Which of the following goods attract GST Cess? a) Diesel-driven motor vehicles of engine capacity not exceeding 3000 cc. b) Solid fuels manufactured from Peat. c) The Aerated waters. d) Cheroots and Cigars.
1) a and c 2) c and d 3) b and c 4) a, b and c Answer: 2 |