GST Cess – Rate, Applicability and Calculation
GST cess is a compensation cess levied under section 8 of The Goods and Services Tax (Compensation to State) Act, 2017. GST cess is levied on intra-state supply of goods or services and inter-state supply of goods or services to provide compensation to the States for loss of revenue due to implementation of GST in India. In this article, we look at the applicability of GST Cess, rate of GST cess and methodology for calculation.
Why GST Cess is Levied?
As GST is a consumption based tax, the state in which the consumption of goods and supply happen would be eligible for the indirect tax revenue. Hence, after GST coming into effect, some states that are net exporter of goods and/or services are expected to experience a decrease in indirect tax revenue.
To compensate the States for the loss in tax revenue, the GST Compensation Cess has been declared by the Central Government. As per the Goods and Services Tax (Compensation to State) Act, 2017, GST compensation cess would be levied for a period of 5 years from GST implementation.
Usage of GST Cess
All the proceeds received from the GST compensation cess would be credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund. The funds would then be used for compensating tax revenue loss to States on account of GST implementation. If any funds are unutilised, then at the end of the transition period, it would be shared in half by the Central Government and all State Government. State government’s share would be distributed in the ratio of their total revenues from the State tax or the Union territory goods and services tax, in the last year of the transition period.
Applicability of GST Cess
GST Cess would be applicable on both supply of goods or services that have been notified by the Central Government. Also, both intra-state supplies of goods or services and inter-state supplies of goods or services would attract GST cess. All taxable person under GST, except taxpayers registered under GST composition scheme are expected to collect and remit GST cess. The following goods will attract GST Cess :
- Pan Masala
- Tobacco and manufactured tobacco substitutes, including tobacco products
- Coal, briquettes, ovoids and similar solid fuels manufactured from coal, lignite, whether or not agglomerated, excluding jet, peat (including peat litter), whether or not agglomerated
- Aerated waters
- Motor cars and other motor vehicles principally designed for the transport of persons (other than motor vehicles for the transport of ten or more persons, including the driver), including station wagons and racing cars.
- Any other supplies as notified from time to time.
Calculating GST Cess
In case the goods or service attracts GST cess, cess must be calculated on the basis of the taxable value of the supply and as provided in the GST cess rate schedule. In case GST cess is applicable on goods imported into India, then cess must be levied and collected along with the IGST and customs duty.
For example, if the assessable value of goods imported into India is Rs. 100/-, GST rate is 18% and customs duty is 10%.
Then IGST tax payable would be calculated as:
Assessable Value= Rs. 100/-
Basic Customs Duty (BCD) = Rs. 10/-
Value for the purpose of levying IGST = Rs. 110/-
GST – Integrated Tax = 18% of Rs.110/- = Rs. 19.80
Total Taxes = Rs. 29.80
If the goods attract GST Compensation Cess, then GST Compensation Cess would be levied on Rs. 110/-, as Compensation Cess is not levied IGST.
GST Cess Rate
| Name of Goods or Service |
HSN Code |
GST Cess |
| Pan Masala |
2106 90 20 |
60% |
|
Aerated waters, containing added sugar or other sweetening matter or flavoured |
||
| Aerated waters |
2202 10 10 |
12% |
| Lemonade |
2202 10 20 |
12% |
| Others |
2202 10 90 |
12% |
|
Tobacco and Tobacco Products |
||
|
Unmanufactured tobacco bearing a brand name |
2401 |
65% |
| Tobacco refuse, bearing a brand name |
2401 30 00 |
61% |
| Chewing tobacco (without lime tube) |
2403 99 10 |
160% |
| Chewing tobacco (with lime tube) |
2403 99 10 |
142% |
| Filter khaini |
2403 99 10 |
160% |
| Jarda scented tobacco |
2403 99 30 |
160% |
| Pan masala containing tobacco ‘Gutkha’ |
2403 99 90 |
204% |
|
Cigarettes |
||
| Non- filter | ||
| Not exceeding 65 mm |
2402 20 10 |
5% + Rs.1591 per thousand |
| Exceeding 65 mm but not 70 mm |
2402 20 20 |
5% + Rs.2876 per thousand |
| Filter | ||
| Not exceeding 65 mm |
2402 20 30 |
5% + Rs.1591 per thousand |
| Exceeding 65 mm but not 70 mm |
2402 20 40 |
5% + Rs.2126 per thousand |
| Exceeding 70 mm but not 75 mm |
2402 20 50 |
5% + Rs.2876 per thousand |
| Others |
2402 20 90 |
5% + Rs.4170 per thousand |
|
Other Tobacco Products |
||
| Cigar and cheroots |
2402 10 10 |
21% or Rs. 4170 per thousand, whichever is higher |
| Cigarillos |
2402 10 20 |
21% or Rs. 4170 per thousand, whichever is higher |
| Cigarettes of tobacco substitutes |
2402 90 10 |
Rs.4006 per thousand |
| Cigarillos of tobacco substitutes |
2402 90 20 |
12.5% or Rs. 4,006 per thousand whichever is higher |
| Other |
2402 90 90 |
12.5% or Rs. 4,006 per thousand whichever is higher |
|
Hookah’ or ‘gudaku’ tobacco tobacco bearing a brand name |
2403 11 00 |
72% |
|
Tobacco used for smoking ‘hookah’or ‘chilam’ commonly known as ‘hookah’ tobacco or ‘gudaku’ |
2403 11 00 |
17% |
| Other smoking tobacco not bearing a brand name. |
2403 11 90 |
11% |
| Smoking mixtures for pipes and cigarettes |
2403 19 10 |
290% |
| Other smoking tobacco bearing a brand name |
2403 19 90 |
49% |
| Other smoking tobacco not bearing a brand name |
2403 19 90 |
57% |
| “Homogenised” or “reconstituted” tobacco bearing a brand name |
2403 91 00 |
72% |
| Preparations containing chewing tobacco |
2403 99 20 |
72% |
| Snuff |
2403 99 40 |
72% |
| Preparations containing snuff |
2403 99 50 |
72% |
| Tobacco extracts and essence bearing a brand name |
2403 99 60 |
72% |
| Tobacco extracts and essence not bearing a brand name |
2403 99 60 |
65% |
| Cut tobacco |
2403 99 70 |
20% |
| All goods, other than pan masala containing tobacco ‘gutkha’, bearing a brand name |
2403 99 90 |
96% |
| All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name |
2403 99 90 |
89% |
|
Other Products |
||
|
Coal; briquettes, ovoids and similar solid fuels manufactured from coal. |
2701 |
Rs.400 per tonne |
|
Lignite, whether or not agglomerated, excluding jet |
2702 |
Rs.400 per tonne |
|
Peat (including agglomerated |
2703 |
Rs.400 per tonne |
|
Motor Vehicles |
||
| Motor vehicles (10<persons <13) |
8702 |
15% |
| Small Cars (length < 4 m ; Petrol<1200 cc ) |
8703 |
1% |
| Small Cars (length < 4 m ; Diesel < 1500 cc) |
8703 |
3% |
| Mid Segment Cars (engine < 1500 cc) |
8703 |
15% |
| Large Cars (engine > 1500 cc) |
8703 |
15% |
|
Sports Utility Vehicles (length > 4m ; engine > 1500 cc; ground clearance > 170 mm) |
8703 |
15% |
| Mid Segment Hybrid Cars (engine < 1500 cc) |
8703 |
15% |
| Hybrid motor vehicles > 1500 cc |
8703 |
15% |
| Hydrogen vehicles based on fuel cell tech > 4m |
8703 |
15% |
| Motorcycles (engine > 350 cc) |
8711 |
3% |
| Aircrafts for personal use. |
8802 |
3% |
| Yacht and other vessels for pleasure or sports |
8903 |
3% |
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