The maximum rate or limit of GST Compensation Cess on tobacco products like cigarettes and pan masala will be set by the Indian government on April 1, 2023. The GST Compensation Cess has been linked, among other things, to the ceiling rate of their retail selling price. This move was part of the changes made to the Finance Bill 2023, which the Lok Sabha approved on Friday.
Pan masala will be subject to a maximum GST compensation cess of 51% of the retail sale price per unit under the new regulations, replacing the 135 percent duty that is currently imposed on the product. In the meantime, the price of tobacco has been set at Rs. 4170 sticks per 1,000 sticks plus ad valorem, or the unit’s retail sale price in full.
It is essential to keep in mind that the cess will be added to the highest GST rate, which is 28%. The cutoff on skillet masala, cigarettes, and other tobacco items has been set in light of one of the 75 corrections made in the Money Bill, which was passed by the Lok Sabha on Walk 24.
According to tax experts, the GST Council will need to issue a notification in order to assess the applicable compensation cess following the government’s change. It is anticipated that this move will have a significant effect on the Indian tobacco industry and its customers.
