The Goods and Services Tax Council has deferred the proposal of imposing cess on sugar. It has constituted a Group of Ministers (GoM) committee to look into the proposal.

Briefing reporters after 27th meeting of the council, Finance Minister Arun Jaitley said that the GoM will take a call on imposition of cess. Proposal talks about imposition of cess at the rate of Rs 3 a kg over and above GST at the rate of 5 per cent. Money collected through cess will be used to provide financial support to the sugarcane farmers. These farmers are having tough time as they are not getting sugarcane dues from mill owners, while mill owners are saying that final product prices are so low in the market making things difficult for them.

However, many states are not in favour of this commodity specific cess. In a letter to Jaitley, Andhra Pradesh Finance Minister, Yanamala Ramakrishnudu, requesting not to impose cess on sugar, as it causes additional burden on the common man. Further, he also stated that the levy of cess is against the spirit of implementing GST that is one tax one nation.

He pointed out that the Central Government had already stopped issuing sugar for public distribution and consequently, the state Governments are forced to bear subsidy burden on sugar supplied through PDS.

The Government of Andhra Pradesh is burdened with the subsidy to the tune of Rs 250 crore per annum on sugar. Any additional levy on sugar in the name of cess will only increase the subsidy burden on the state, he said while demanding that the proposal to levy cess on sugar should be withdrawn, and the problems of the sugar sector may be addressed through direct budgetary support.

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