GST Council may go for more rate revisions

18 July, 2017, 09:54 | Author: Valerie Burke
  • GST Impact Compensation Cess Increased on Cigarettes Smoking to Become Costlier

The GST Council on Monday stepped in to check the windfall being reaped by cigarette manufacturers and increased the cess by 48 paise to 79p per stick, although the impact on prices is now unclear.

The compensation cess on cigarettes consists of two components - an ad valorem tax of 5 per cent and a numerical amount on each category of filter and non-filter varieties.

The GST Council's decision has affected most tobacco stocks, including the stock of Modi Group firm Godfrey Phillips India which fell 5.01 percent or 61.50 points at 1166 level.

The GST Council will meet next in the first week of August to review the progress of the new tax regime's implementation, Jaitley said.

The GST Council had in May fixed 28 per cent as the top rate for cigarettes. The fixed cess varies depending on length and whether cigarettes are filter or non-filter.

The cess varied from Rs 2,126 to Rs 4,170 for cigarettes of different lengths. A statement issued after the GST Council meeting said the method of calibrating the GST compensation cess on cigarettes did not take into consideration the cascading of taxes that existed in the earlier regime, which has now disappeared, thus leading to a reduction in the tax burden on the item.

Over 65 mm but less than 70 mm: The price will increase by Rs 0.792 per cigarette. Announcing this Tamil Nadu Finance Minister D Jayakumar, who participated in the meeting through video-conferencing, said during the meeting the proposal to increase the levy of cess on cigarettes was discussed.

Jaitley said the total taxpayer base under the GST will easily exceed 80 lakh, the number originally registered under the previous indirect tax regime, which also had duplication because of registrations under Value Added Tax and excise.

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