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The government has fixed GST Cess based on Retail Selling Price (MRP) effective from April 1 on companies manufacturing Pan Masala and Tobacco Products. In addition to the Goods and Services Tax (GST) levied at the rate of 28 percent on pan masala and tobacco products, a cess was levied in proportion to their value, but now this system has been changed.
so much cess on paan masala
According to the notification issued by the Ministry of Finance, 0.32 times the retail selling price (RSP) of pan masala pouches 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
On the other hand, GST cess on pan masala containing tobacco gutkha will be 0.61 times of RSP, while this rate for cigarette and pipe tobacco material 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 will 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 in preventing tax evasion, as the cess will be collected at the factory level itself.
What do experts say
Rajat Mohan, senior partner, AMRG & Associates, said that adopting an RSP-based cess system can provide the government with a more sustainable source of revenue. He said that tax evasion in the pan masala industry can be reduced by collecting tax at the manufacturer’s level.
He said that tax evasion in the pan masala industry can be reduced by collecting tax at the manufacturer’s level. Mohan says that in the new system, tax will be collected at the first point of sale itself, which will minimize the scope of tax evasion.
change due to
It is estimated that the revenue collection in the RSP based model may 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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