Maximum GST Cess rates on pan-masala and cigarettes capped by the Centre

The government has fixed the maximum rate of GST compensating cess on pan masala, cigarettes, and all other tobacco types, with the highest rate linked to the retail selling price. This measure has been implemented to ensure the efficient collection of taxes in a structured manner.

Finance Bill 2023

The cess rate has been capped due to the amendments to the Finance Bill 2023. The Lok Sabha passed this bill last Friday. According to the amendment, the maximum GST compensation cess rate for pan masala will be 51 percent of the retail sale price per unit.

This marks a significant reduction compared to the earlier system that levied a cess of 135 percent ad valorem. Similarly, tobacco, which was previously charged at Rs 4,170 per thousand sticks, will now be subject to a cess of 290 percent ad valorem or 100 percent of the retail sale price per unit. It is important to note that the highest charge levied so far has been Rs 4,170 per thousand sticks plus 290 percent ad valorem.

[Note: A Cess is a supplementary tax charged by the government for particular purposes, in addition to existing taxes such as excise and personal income tax. Unlike regular taxes and levies, this extra tax is levied until the government has sufficient income for the particular purpose. The Goods and Services Tax is a unified indirect tax regime implemented nationwide.]

GST rates on tobacco products

This cess will be charged over and above the maximum Goods and Services Tax (GST) rate of 28 percent. The recent changes in schedule-I of the GST compensation cess Act, brought in via an amendment in the Finance Bill, now cap the maximum cess that can be charged on Pan masala and tobacco products.

Also read: Why should you use cryptocurrencies?

Taxes and levies imposed on cigarettes and tobacco products

According to the GST law, cigarettes and tobacco products are categorized as sinful goods, subjecting them to a compensation cess. Similarly, the Central Excise laws impose an excise duty and National Calamity Contingent Duty (NCCD) on these products. The manufacturing rates for cigarettes and tobacco products have been outlined in the following table, detailing the most recent excise duty, NCCD, and compensation cess rates.

Tobacco is an unforgiving thing in India.

Tobacco has existed in India for a long time, and the citizen is deeply connected with this no matter what the price goes, whether very high or very low. Government practices will not affect these consumers.

Also read: Bob Penny, a Forrest Gump Actor, Died at the Age of 87