In order to curb tax evasion, the Government is likely to impose the GST cess on pan masala at the manufacturing stage itself based on production capacity.
The most powerful Goods and Services Tax Council may take a final decision in this regard in the next meeting later this month.
This is against the current practice of imposing it on supplies made by the manufacturer.
As per the amendment, compensation cess would be levied on the presumptive capacity of production declared by a manufacturer to the Goods and Services Tax (GST) authorities, sources told PTI.
Commodities like pan masala are prone to tax evasion as they are available in small sachets and are bought mostly in cash and hence tracking their final supplies is difficult for tax authorities.
Once the Council, chaired by Finance Minister Arun Jaitley and comprising his state counterparts, approves the proposal, it would be sent to the law ministry for vetting.
The amendment is likely to be introduced in the second leg of the Budget session of Parliament in March.
Currently, on top of the highest GST rate of 28 percent, 60 per cent cess is levied on pan masala whereas pan masala containing gutkha attracts 204 per cent cess.
