The charge for tobacco has been mounted at Rs 4,170 per thousand sticks plus 290 per cent advert valorem or 100 per cent of the retail sale value per unit. (Representative picture)
The capping of the cess charge was introduced in as a part of the amendments to the Finance Bill, 2023, which was handed by the Lok Sabha final Friday.
The authorities has capped the utmost charge of GST compensation cess that will be levied on pan masala, cigarettes and different types of tobacco and linked the very best charge to their retail sale value.
The capping of the cess charge was introduced in as a part of the amendments to the Finance Bill, 2023, which was handed by the Lok Sabha final Friday.
As per the modification, the utmost GST compensation cess charge for pan masala might be 51 per cent of the retail sale value per unit. In the present regime, the cess is charged at 135 per cent advert valorem.
The charge for tobacco has been mounted at Rs 4,170 per thousand sticks plus 290 per cent advert valorem or 100 per cent of the retail sale value per unit.
So far, the very best charge was Rs 4,170 per thousand sticks plus 290 per cent advert valorem.
The cess is levied over and above the very best Goods and Services Tax (GST) charge of 28 per cent.
Changes in schedule-I of GST compensation cess Act, introduced in by way of modification in Finance Bill, has capped the utmost cess that may be charged on Pan masala and tobacco merchandise.
Tax consultants, nonetheless, stated to establish the precise compensation cess relevant following this variation, the GST council might want to concern a notification.
AMRG & Associates Senior Partner Rajat Mohan stated the newest modification within the GST Compensation cess legislation is an enabler that can allow the GST council to introduce relevant tax charges by a notification.
“This change marks a major shift in taxation coverage for pan masala and tobacco-supplying corporations. Though this coverage will arrest tax evasion to an important extent on this sector, it nonetheless might show to be a regressive plan from an financial standpoint,” Mohan said.
In February, the GST Council chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, had 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.
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