GST Cess : Meaning, Calculation and Rates

| 2 years ago

Meaning of Cess Under GST

GST Cess is an additional indirect tax that has been introduced through the GST (Compensation to States) Act, 2017.

GST Cess is charged only on the supply of notified/selected goods and services. The Cess would be in addition to the normal GST rates. You can get GST rate- Here.

Broadly there are 6 supplies on which GST cess applies. These are:

  1. Pan Masala
  2. Prescribed water
  3. Tobacco and related products
  4. Minerals
  5. Vehicles
  6. Specified services

gst CESS

🙄 So, Why GST Cess is Levied?

Previously in the VAT regime, sales tax (VAT) was collected by the state Govt. from which supplies were made.

Say, Mr.Ram of West Bengal supplies good to Bihar. In this case, West Bengal Govt. would have collected CST from Mr.Ram. Bihar will get nothing from this transaction.

After the implementation of GST, taxes are getting apportioned between the Centre and the states in which consumption takes place.

In the above case, after the implementation of GST, Mr Ram will pay IGST. This IGST will get apportioned between Centre and Bihar (Consuming state). West Bengal will get nothing from this transaction.

In order to compensate the supplying state (WB in above case) from revenue loss, GST (Compensation to States) Act, 2017 was introduced. Supplying states have been guaranteed 14% p.a revenue growth for the next 5 years.

Clean Environmental Cess on coal will be replaced by GST Compensation Cess.

🙄 Who will collect GST Cess?

Every taxable person under GST supplying prescribed goods or services or both shall collect GST Cess at a prescribed rate.

Composite Dealers are not required to collect GST Cess.

💡 How GST Cess is Calculated?

GST cess rate shall be levied on prescribed supplies of goods and services, on the basis of value, quantity or on the prescribed basis at the prescribed rate.

GST cess on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975, at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962, on a value determined under the Customs Tariff Act, 1975.

Example: D S Ltd, a manufacturer of Pan Masala, sell Rajni Gandha of Rs.10,000 (excl.GST) to a dealer. GST rate of Pan Masala is 28% and GST cess rate is 60%.  Do the GST Cess Calculation?

Solution: The total bill amount after GST and cess will be Rs.18,800/-.

Pan Masala 10000
Add
GST (CGST+SGST/IGST) @ 28% 2800
GST Cess @ 60% (10000*0.6) 6000
Total 18800

Qes: Can I avail ITC of Cess paid on inward supplies?

Ans: Yes, ITC of cess paid on inward supply can be availed. But it should be availed against the payment of Cess liability only.

Refund: Input Credit [ITC] of Compensation Cess

A person making zero rate supply can claim the refund of input compensation cess even if the final product is not leviable to cess. [Section 16(3)(a) IGST]

Refund will be available only in the case of export made under bond or Letter of Undertaking [LOU].

Example:
SM Steel, an exporter of Spong Iron, pay cess on coal which is an input for the manufacture of Spong Iron.

In this case, SM Steel can claim the refund of unutilised input tax credit (including compensation cess), if it exports Iron under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed.

If the entity export Iron on payment of integrated tax than it can claim the refund of only the paid IGST.

[Circular_45]

💡 GST Cess Rates

Sl no HSN Code                             Description of Goods Rate of GST
compensation
cess %
1 2106-90-20 Pan-masala 60
                                                                        Prescribed Water
2 2202-10-10 Aerated waters 12
3 2202-10-20 Lemonade 12
4 2202-10-90 Others 12
                                                               Tobacco and related products
5 2401 Unmanufactured tobacco (without lime tube) –
bearing a brand name
71
6 2401 Unmanufactured tobacco (with lime tube) – bearing a
brand name
65
7 2401-30-00 Tobacco refuse, bearing a brand name 61
8 2402-10-10 Cigar and cheroots 21% or Rs. 4170
per thousand,
whichever is
higher
9 2402-10-20 Cigarillos 21% or Rs. 4170
per thousand,
whichever is
higher
10 2402-20-10 Cigarettes containing tobacco other than filter cigarettes, of length, not exceeding 65 millimetres 5% + Rs. 2076 per thousand
11 2402-20-20 Cigarettes containing tobacco other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 75 millimetres 5%+ Rs. 3668 per thousand
12 2402-20-30 Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its
actual length, whichever is more) not exceeding 65
millimetres
5% + Rs. 2076 per thousand
13 2402-20-40 Filter cigarettes of length (including the length of the
filter, the length of filter being 11 millimetres or its
actual length, whichever is more) exceeding 65
millimetres but not exceeding 70 millimetres
5% + Rs. 2747 per thousand
14 2402-20-50 Filter cigarettes of length (including the length of the
filter, the length of filter being 11 millimetres or its
actual length, whichever is more) exceeding 70
millimetres but not exceeding 75 millimetres
“5% + Rs. 3668 per thousand
15 2402-20-90 Other cigarettes containing tobacco 36% + Rs. 4170 per thousand
16 2402-90-10 Cigarettes of tobacco substitutes Rs.4006 per
thousand
17 2402-90-20 Cigarillos of tobacco substitutes 12.5% or Rs.
4,006 per
thousand
whichever is
higher
18 2402-90-90 Others 12.5% or Rs.
4,006 per
thousand
whichever is
higher
19 2403-11-10 Hookah’ or ‘gudaku’ tobacco bearing a brand name 72
20 2403-11-10 Tobacco used for smoking ‘hookah’ or ‘chilam’
commonly known as ‘hookah’ tobacco or ‘gudaku’
not bearing a brand name
17
21 2403-11-90 Other water pipe smoking tobacco not bearing a
brand name.
11
22 2403-19-10 Smoking mixtures for pipes and cigarettes 290
23 2403-19-90 Other smoking tobacco bearing a brand name 49
24 2403-19-90 Other smoking tobacco not bearing a brand name 11
25 2403-91-00 “Homogenised” or “reconstituted” tobacco, bearing a
brand name
72
26 2403-99-10 Chewing tobacco (without lime tube) 160
27 2403-99-10 Chewing tobacco (with lime tube) 142
28 2403-99-10 Filter khaini 160
29 2403-99-20 Preparations containing chewing tobacco 72
30 2403-99-30 Jarda scented tobacco 160
31 2403-99-40 Snuff 72
32 2403-99-50 Preparations containing snuff 72
33 2403-99-60 Tobacco extracts and essence bearing a brand name 72
34 2403-99-60 Tobacco extracts and essence not bearing a brand
name
65
35 2403-99-70 Cut tobacco 20
36 2403-99-90 Pan masala containing tobacco ‘Gutkha’ 204
37 2403-99-90 All goods, other than pan masala containing tobacco
‘gutkha’, bearing a brand name
96
38 2403-99-90 All goods, other than pan masala containing tobacco
‘gutkha’, not bearing a brand name
89
                                                                             Minerals
39 2701 Coal; briquettes, ovoids and similar solid fuels
manufactured from coal
Rs.400 per tonne
40 2702 Lignite, whether or not agglomerated, excluding jet Rs.400 per tonne
41 2703 Peat (including peat litter), whether or not
agglomerated
Rs.400 per tonne
                                                                              Vehicles
42 8702-10/8702-20/8702-30/8702-90 Motor vehicles for the transport of not more than 13
persons, including the driver
15
43 8703-21 /
8703-22
Petrol, Liquefied petroleum gases (LPG) or
compressed natural gas (CNG) driven motor vehicles
of engine capacity not exceeding 1200cc and of
length not exceeding 4000 mm
1
44 8703 Motor vehicles of engine capacity not exceeding 1500 cc 17
45 8703 Motor vehicles of engine capacity exceeding 1500 cc 20
46 8703 Motor vehicles of engine capacity exceeding 1500 cc,
popularly known as Sports Utility Vehicles (SUVs)
including utility vehicles
22
44 8703-31 Diesel driven motor vehicles of engine capacity
not exceeding 1500 cc and of length not exceeding
4000 mm
3
45 8711 Motorcycles of engine capacity exceeding 350 cc. 3
46 8802 Other aircraft (for example, helicopters, aeroplanes),
for personal use
3
47 8803 Yacht and other vessels for pleasure or sports 3
                                                                      Specified Services
48 Chap 99 Transfer of the right to use any goods Cess rate on supply of such goods involving transfer of title in goods
49 Chap 99 Transfer of right in goods or of undivided share in goods without the transfer of title
thereof
Cess rate on supply of such goods involving transfer of title in goods
50 Chap 99 Leasing of motor vehicles purchased and leased prior to 1st July 2017 65% of Cess rate on supply of such goods involving transfer of title in goods

Sources:

  1. Notification no 01/2017- CC
  2. Notification no 02/2017- CC
  3. Notification no 03/2017- CC
  4. Notification no 05/2017- CC
  5. Notification no 06/2017- CC
  6. GST (Compensation to States) Act, 2017

Also Read:

Adverts *

Cancel