The Goods and Services Tax (GST) Council on Monday raised the GST compensation cess on cigarattes over the higher rate of 28 per cent. The effect on their prices was lower under the new taxation regime than earlier. The increase will give the government around Rs 5,000 crore more in revenue which would be used for compensating states.
The new rate would be applicable from today midnight.
After the meeting, Finance Minister Arun Jaitley clarified that the peak GST rate of 28 per cent and ad valorem cess of 5 per cent would remain. However, specific cess on the basis of the length of cigarettes would be raised from midnight Monday.
“It was noted in the first 15 days of the GST implementation that when the rate on cigarettes was translated, the cascading effect of taxes was not factored in. We noted that cigarette companies were getting windfall profit from reduction in cigarette prices, Jaitley said.
| Compensation Cess Rates | ||||
| Tariff Item | Present rate | Proposed Increase | New rates | |
| Non- filter | ||||
| 2402 20 10 | Not exceeding 65 mm | 5% + Rs.1591 per thousand | Rs.485 per thousand | 5% + Rs.2076per thousand |
| 2402 20 20 | Exceeding 65 mm but not 70 mm | 5% + Rs.2876 per thousand | Rs.792 per thousand | 5% + Rs.3668per thousand |
| Filter | ||||
| 2402 20 30 | Not exceeding 65 mm | 5% + Rs.1591 per thousand | Rs.485 per thousand | 5% + Rs.2076per thousand |
| 2402 20 40 | Exceeding 65 mm but not 70 mm | 5% + Rs.2126 per thousand | Rs.621 per thousand | 5% + Rs.2747per thousand |
| 2402 20 50 | Exceeding 70 mm but not 75 mm | 5% + Rs.2876 per thousand | Rs.792 per thousand | 5% + Rs.3668per thousand |
| 2402 20 90 | Others | 5% + Rs.4170 per thousand | 31% | 36% + Rs.4170 per thousand |
