- 27 Mar 2023
- ICICIdirect Research
Maximum cap of GST cess linked to retail price
News: The government has capped the maximum rate of GST compensation cess that would be levied on pan masala, cigarettes and other forms of tobacco and linked the highest rate to their retail sale price. As per the amendment, the maximum GST compensation cess rate for pan masala will be 51% of the retail sale price per unit. In the current regime, the cess is charged at 135% ad valorem. The rate for tobacco has been fixed at | 4,170 per thousand sticks plus 290% ad valorem or 100% of the retail sale price per unit
Views: The change in taxation on tobacco products could result in saving on tax evasion on products like Pan Masala, which is likely to result in a change in some demand shift from other forms of tobacco to cigarettes. However, the current amendment is only enabling change & actual change in GST or cess would be taken in the GST Council Meeting
Impact: Positive