GST Cess Capped at 15% by GST Council -16.03.2017

By | March 17, 2017
(Last Updated On: March 17, 2017)

GST Cess

In November last year, the Council had decided a four-tier rate structure for GST of 5%, 12%, 16% and 28%. A cess over and above the highest rate will be levied on demerit or ‘sin’ goods like tobacco, pan masala and luxury cars.

Maximum rate of GST Cess: That cess will be capped at 15%, Jaitley said on Thursday.16.03.2017

GST Cess Rates for Different Items

GST Cess on luxury cars and aerated drinks.:- The 15 per cent cess cap would apply on luxury cars and aerated drinks.

GST Cess On pan masala, the cess has been capped at 135 per cent ad valorem.

GST Cess on Tobacco will be capped at a mixture of Rs 4,170 per 1,000 sticks or ad valorem of 290 per cent.

GST Cess on coal would be at Rs 400 per ton. No decision has been taken to levy cess on bidis as of now, an official said.

Example on GST Cess :- 

“These are not the actual cess charges, these are only the caps. Take, for example, luxury cars. If 28 percent is the tax (under GST), and the current tax is 40 percent, then the cess will be 12 percent. But for the purposes of empowerment, we have kept a cap of 15 (percent) on the cess even though we may end up imposing only 12 percent. We have kept a little of headspace,” the finance minister explained.

Purpose of GST Cess:– The actual cess on demerit goods, which will help create a corpus for compensating states for any loss of revenue from GST implementation in the first five years, may be lower than the cap said finance minister

Industry welcomed GST Cess rate capping

Welcoming the decision to ringfence the rate of cess on demerit goods at 15 percent, Rajeev Dimri, leader of indirect tax at BMR & Associates said in emailed statement, “This would provide certainty of maximum cess costs that the relevant sectors may need to consider in working out their pricing under GST regime. Any increase over these rates would require Parliament approval thereby ruling out the possibility of any unexpected overnight surge in cess rates.”

Net Meeting of GST Council – 13th meeting

Jaitley said the GST Council will meet again on March 31 to approve rules after which fitting goods and services in the four-slab tax structure of 5, 12, 18 and 28 per cent will be taken up.

The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and state legislatures will soon clear the S-GST bills so that the new indirect tax regime can be rolled out from July 1.

Listen Finance Minster speech on GST Cess

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