Pan Masala And Tobacco Products Including Cigarettes GST Cess Will Now Apply On MRP Rather Than Actual Sale Price At Factory Gate

Cigarette-Tobacco GST: The government has fixed the maximum rate or maximum limit of GST compensation cess to be imposed on tobacco products like cigarettes and pan masala. Among other items, GST Compensation Cess has been linked to a ceiling rate of their retail selling price. This rule issued by the government is being implemented from the coming 1 April 2023.

The maximum rate of cess fixed under the amendments brought in the Finance Bill 2023

Under the amendments brought in the Finance Bill 2023, the maximum rate of cess has been fixed. This bill has been passed in the Lok Sabha on Friday. According to the Finance Bill, pan masala will attract a maximum GST compensation cess of 51 per cent of the retail sale price per unit. At present, 135 per cent duty is charged on Pan Masala.

what is the verdict

The maximum GST compensation cess rate for pan masala will be 51 per cent of the retail sale price per unit, which is currently levied at 135 per cent ad valorem.

Similarly, the rate for tobacco has been fixed at Rs 4170 per thousand sticks plus 290 per cent ad valorem or 100 per cent of retail sale price per unit.

Cess is levied over and above the top GST rate of 28 per cent

The cess is levied over and above the highest GST rate of 28 per cent. This limit on pan masala, cigarettes and other tobacco products has been fixed on the basis of one of the 75 amendments made in the Finance Bill, which was passed in the Lok Sabha on March 24.

What do tax experts say

According to the opinion of tax experts, after this change made by the government, the GST Council (GST Council) will need to issue a notification for assessment for the compensation cess applicable.

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