A section of the business community believes putting additional cess on demerit goods is “wrong in principle” in the GST regime as it defeats the purpose of unified taxation. “Levying additional cess on any type of goods is in priciple wrong in the concept of GST. It defeats the purpose of unified taxation,” MCC Chamber of Commerce and Industry president Hemant Bangur said in his first media interaction on Wednesday.
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“I have nothing to say on rates but it should not happen with cess as this will open floodgates for various types of cess in future… It will only complicate,” he pointed out.
When his reaction was sought, Bharat Chamber of Commerce president Rakesh Shah said, “Cess is not a good practice but the government has no option to charge higher tax on luxury and demerit more than 26 per cent, the highest rate and thus this mechanism is adopted.”
A four-slab GST tax structure of 6, 12, 18 and 26 per cent with lower rates for essential items and the highest for luxury and demrit goods that will also be levied with an additional cess was mooted on the first day of the crucial GST Council meet.
“The proposal of imposition of cess on luxury goods will be against the principle of GST. It will aid in creating inflation while the states will benefit,” Bengal Chamber of Commerce and Industry chairman indirect taxes T B Chatterjee said.
Ultra-luxury items include high-end cars and demerit goods comprise tobacco, cigarettes, aerated drinks, luxury car and polluting items.