Sign In

Browse By

Increase in GST Compensation Cess rate on cigarettes

Increase in GST Compensation Cess rate on cigarettes 

Increase in GST Compensation Cess rate on cigarettes 

In pursuance of the recommendations of the GST Council in its 14th Meeting held on 18.05.2017 and 19.05.2017, the Compensation Cess rates under Section 8 (2) of the Goods and Services Tax (Compensation to States) Act, 2017, was notified vide notification No.1/2017-Compensation Cess (Rate), dated 28.06.2017 on Intra-State or Inter-State supply of the specified goods, including cigarettes.

 

            In respect of cigarettes, the Fitment Committee had recommended that in line with the weighted average VAT rate [28.7%], the GST rate on cigarettes may be kept at 28%. In addition, Compensation Cess may be levied on cigarettes at rates equal to 1.05 times the Specific Excise Duty Rates [net of NCCD]. However, this method of calibrating the Compensation Cess did not take into consideration the cascading of taxes [that is in earlier regime VAT being charged on value inclusive of the excise duty]. As a result, the total tax incidence on cigarettes in GST regime has come down, as compared to the total tax in pre-GST regime.

 

            While any reduction in tax incidence on items of mass consumption would be welcome, the same would be unacceptable in case of demerit goods like cigarettes.

 

            The GST Council in its 19th Meeting  held today i.e. on 17.07.2017 reviewed the Compensation Cess rates on cigarettes and recommended the following increase in the same with effect from 00 hours on 18th July, 2017 i.e. the midnight of 17th and 18th July, 2017:

 

 

 

Compensation Cess Rates

Tariff Item

 

Present rate

Proposed Increase

New rates

 

Non- filter

 

 

 

2402 20 10

Not exceeding 65 mm

5% + Rs.1591 per thousand

Rs.485 per thousand

5% + Rs.2076per thousand

2402 20 20

Exceeding 65 mm but not 70 mm

5% + Rs.2876 per thousand

Rs.792 per thousand

5% + Rs.3668per thousand

 

Filter

 

 

 

2402 20 30

Not exceeding 65 mm

5% + Rs.1591 per thousand

Rs.485 per thousand

5% + Rs.2076per thousand

2402 20 40

Exceeding 65 mm but not 70 mm

5% + Rs.2126 per thousand

Rs.621 per thousand

5% + Rs.2747per thousand

2402 20 50

Exceeding 70 mm but not 75 mm

5% + Rs.2876 per thousand

Rs.792 per thousand

5% + Rs.3668per thousand

2402 20 90

Others

5% + Rs.4170 per thousand

31%

36% + Rs.4170 per thousand

Profile photo of CA Shafaly Girdharwal CA Shafaly Girdharwal

CA

New Delhi, India

CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.

Discuss Now
Opinions & information presented by ConsultEase Members are their own.