central government has capped the maximum rate of GST compensation cess that would be levied on pan masala, cigarettes, and other forms of tobacco and linked the highest rate to their retail sale price. It was brought as part of amendments to the Finance Bill 2023, which was passed by the Lok Sabha on Friday.
According to the amendment, the maximum GST compensation cess rate for pan masala will be 51% of the retail sale price per unit, from the current cess charge at 135% ad valorem. The rate for tobacco has been fixed at Rs 4,170 per thousand sticks plus 290% ad valorem or 100% of the retail sale price per unit.
The cess is levied over and above the highest Goods and Services Tax (GST) rate of 28%, as per PTI reports.
Changes in schedule-I of GST compensation cess Act, brought in via amendment in the Finance Bill, have capped the maximum cess that can be charged on Pan masala and tobacco products.
However, tax experts said to ascertain the exact compensation cess applicable following this change, the GST council will need to issue a notification.