The government has set a cap on the maximum rate of GST compensation tax imposed on tobacco products
Posted Date – 06:45 AM, Mon – 27 March 23
New Delhi: The government has capped the maximum rate of GST compensation levied on tobacco products such as cigarettes and pan masala.
The cap was one of 75 amendments in the Finance Bill passed in the Lok Sabha on March 24.
Compensation tax has been pegged to the top tax rate on its retail price.
According to the Finance Act, pan masala will be charged a GST compensation tax of up to 51% of the retail price.
Currently pan masala is charged at 135% ad valorem.
Similarly, tobacco is taxed at a fixed rate of Rs 4,170 per thousand sticks plus 290% ad valorem duty or 100% of the retail price per unit.
The tax is levied on top of the GST rate of up to 28%.
