Economy

Higher cess on tobacco and pan masala

Our Bureau New Delhi | Updated on January 15, 2018 Published on March 16, 2017

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Sin goods such as pan masala will have a maximum cess of 135 per cent ad valorem.

The GST Council has approved a proposal to impose a cess on mineral water and motor cars, including station wagons and racing cars.

Under the draft compensation Bill, it has proposed to cap the cess rates at 15 per cent, but it will be higher for items such as pan masala and environmentally harmful products.

The cess, in place of the clean energy cess, would also apply on coal, lignite and peat at a rate of ₹400 per tonne.

Sin goods such as pan masala will have a maximum cess of 135 per cent ad valorem.

Tobacco and manufactured substitutes, including tobacco products, would attract the cess at ₹4,170 per 1,000 sticks or 290 per cent ad valorem or as a combination of the two.

It is unlikely that States will apply the cess on bidis, said an official. The draft suggests that the cess would be levied on “water, including mineral water and aerated water” that contains sugar or added flavouring.

It would also be applicable on motor cars, excluding those for public transport or vehicles that “transport” more than 10 people, including the driver.

The money collected as cess will go to the GST Compensation Fund.

The fund would be used to compensate States for their revenue loss for a period of five years after the rollout of GST.

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Published on March 16, 2017
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