Cess to be levied on at least 50 goods and service under GST

After the fitment of rates under GST, the fine print suggests that there will be nearly 50 goods and services on which the GST Council will imposed cess.

The original idea of GST was to make it a cess-free regime but the government later felt that compensation to states for their revenue losses during implementation of GST may not be possible without levying cess.

The Centre will compensate states for a period of five years for the loss of revenue arising on account of implementation of the GST.

A compensation kitty will be created by imposing cess on at least 50 luxury and sin goods. Though the idea of cess is to levy it for a specific purpose and also the cess proceeds are not shared with states. But under the GST Council, it has been decided that any surplus in the compensation kitty will be divided between the Central and states governments after the end of five years.

A few items on which cess (in brackets) will be levied

• Pan Masala (60%)
• Aerated Soft Drinks (12%)
• Pan Masala containing ‘Gutkha’ (204%)
• 65-70mm filter cigarette (5%) + Rs 2.1/stick
• Cigars and Cheroots (21%) + Rs 4.2/stick
• Small petrol cars below 1200cc (1%)
• Small diesel cars below 1500cc (5%)
• Large cars above 1500cc (15%)
• SUV above 1500cc (15%)
• Mid-segment hybrid cars (15%)
• Hybrid motor vehicles above 1500cc (15%)
• Motorcycles above 350cc (3%)
• Personal use aircraft (3%)
• Yachts and other vessels for pleasure, sport (3%)