Government has fixed GST Cess based on Retail Selling Price (MRP) effective from April 1 on companies manufacturing Pan Masala and Tobacco Products. Pan masala and tobacco products were earlier subject to 28 per cent Goods and Services Tax (GST) plus a cess proportionate to their value, but now this system has been changed.
So much cess on pan masala
According to the notification issued by the Ministry of Finance, 0.32 times the retail selling price (RSP) of pan masala pouch will be charged as GST cess. The new rates have come into effect from the date of April 1, 2023.
New rates of tobacco and cigarettes
Paan masala containing tobacco gutkha will attract a GST cess of 0.61 times the RSP, while For cigarette and pipe tobacco products, this rate is 0.69 times. Chewing tobacco, filtered khaini and zarda will attract a cess of 0.56 times the RSP, while the rate for hookah and branded raw tobacco is 0.36 times.
Tax evasion to come down
By imposing GST cess on the basis of retail selling price, companies manufacturing products like tobacco, pan masala and cigarettes will now have to pay cess on the final retail price of pan masala and tobacco products while leaving the factory. This will help prevent tax evasion, as the cess will be collected at the factory level itself.
What experts say
Rajat Mohan, senior partner, AMRG & Associates, said that Adopting an RSP-based cess system can provide a more sustainable source of revenue to the government. He said that tax evasion in the pan masala industry can be reduced by collecting the tax at the manufacturer’s level.
He said that tax evasion in the pan masala industry can be reduced by collecting the tax at the manufacturer’s level. can be done. Mohan says that in the new system, the tax will be collected at the first point of sale, which will minimize the scope of tax evasion. It is believed that the revenue collection that will be done in the RSP based model can remain close to the earlier system. Although some cases of tax cherry were being seen in the old system. This is the reason why the government decided to change the tax system.
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