Govt caps maximum GST cess rate on tobacco products

The cess rate for tobacco has been fixed at Rs 4,170 per thousand stick plus 290 per cent ad valorem or 100 per cent of the retail sale price per unit. So far, the highest rate was Rs 4,170 per thousand stick plus 290 per cent ad valorem. The cess is levied over and above the highest GST rate of 28 per cent.

Finance Bill, GST compensation, GST rates, Finance Bill amendments, tobacco prices, Business news, Indian express, Current Affairs

The amendment was required to be made in the Goods and Services Tax (Compensation to States) Act as an enabling provision to revise the cess levy. Notifications would now need to be brought in separately to bring these changes in cess into effect.

The government has brought in amendments in the Finance Bill to cap the maximum rate of GST compensation cess on pan masala, cigarettes and other forms of tobacco and linked the highest rate to their retail sale price.

As per the Finance Bill amendments, which were passed in Lok Sabha on Friday, the maximum GST compensation cess rate for pan masala will be 51 per cent of the retail sale price per unit compared with 135 per cent ad valorem at present. The cess rate for tobacco has been fixed at Rs 4,170 per thousand stick plus 290 per cent ad valorem or 100 per cent of the retail sale price per unit. So far, the highest rate was Rs 4,170 per thousand stick plus 290 per cent ad valorem. The cess is levied over and above the highest GST rate of 28 per cent.

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In February the GST Council, chaired by the Union Finance Minister and comprising state finance ministers, had approved the recommendations of a Group of Ministers on plugging tax evasion in pan masala and gutkha businesses.

The GoM did not favour a capacity-based levy and had suggested compliance and tracking measures to be taken to plug leakages/evasions; exports of such commodities to be allowed only against letter of undertaking with consequential refund of accumulated input tax credit; and had suggested compensation cess levied on such commodities to be changed from ad valorem to specific tax based levy to boost the first stage collection of the GST revenues.

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Congress releases second list for Bihar elections, fields 5 candidates

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