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Braking News: GST Council caps cess on luxury goods, aerated drinks at 15%

May 04, 2017

A maximum of 15% cess on top of the peak GST rate of 28% will be levied on luxury goods and aerated drinks after the GST Council approves a cap on cess along with supporting legislations.

the Finance minister Arun Jaitley said that the actual cess on demerit goods, which will help create a corpus for compensating states for any loss of revenue from GST implementation in the first five years, may be lower than the cap as the Council has kept a “little” headroom for future exigencies,

Giving an example, if a luxury car at present commands a total tax of 40%, under the new indirect tax regime, a GST of 28% plus 12% cess would be levied to keep the tax incidence at the same level.

The 15% cess cap would apply on luxury cars and aerated drinks. On pan masala, the cess has been capped at 135% ad valorem. Tobacco cess will be capped at a mixture of Rs4,170 per 1,000 sticks or ad valorem of 290%.

Cess on coal would be at Rs 400 per ton. No decision has been taken to levy cess on bidis as of now, as per he Government sources.

The panel today also cleared the State-GST (S-GST) and Union Territory GST (UT-GST) legislations,

The panel at its last meeting approved the final draft of central GST (C-GST) and integrated GST (I-GST) laws. The supporting S-GST and UT-GST legislations together with the GST Compensation Law will go to the Cabinet for a formal nod before they are presented in Parliament in the ongoing Budget session that ends on 12 April.

The government is hoping the C-GST, I-GST, UT-GST and the GST Compensation laws will be approved in the current session of Parliament and state legislatures will soon clear the S-GST bills so that the new indirect tax regime can be rolled out from 1 July.

As per the statement of Shri. Jaitley, the GST Council will meet again on 31 March to approve rules after which fitting goods and services in the four-slab tax structure of 5, 12, 18 and 28% will be taken up.

This article was first published on LinkedIn by Geetha Varadarajan

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