Decks have been cleared by the GST Council on 16th March to introduce GST from Ist July, 2017 by clearing all the requisite bills relating to this innovative fiscal taxation system . The Council had earlier approved the CGST Bill , IGST Bill and Compensation Bill and now on 16th March it has approved SGST Bill and UTGST Bill to pave way for implementation of this most important fiscal taxation reform in the country . The GST Council has also agreed on fixing the ceiling on cess that will be imposed to bridge the likely loss to the States at the initial stage of the introduction of the GST. Following maximum limits of cess have been approved by the Council :
Sl. No. Name of Supplies Maximum Cess
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1 Luxury cars , station wagons & racing cars 15%
2 Aerated drinks 15%
3 Pan Masala 135%
4 Tobacco & Cigarettes 290% or Rs. 4,170/1000 sticks or a combination
5 Coal and lignite Rs. 400/tonne
6 All other supplies 15%
The aforesaid levy of cess shall be a maximum of 15 % on top of the 28% GST rate in respect of luxury cars , soft drinks and mineral waters as mentioned in the aforesaid list . Similarly in respect of other supplies as mentioned in the aforesaid list , the cess shall be levied . Such a levy is to be made to create a fund with a corpus of around Rs. 50,000 crores for meeting the compensatory liability . It has been clarified that the cess shall be applicable for five years , the period for which the Centre has committed to compensate the States for potential revenue losses and the council has kept the option of adding more items to the list later . Although the exact rate of cess shall be decided by the Council when the rates of GST are finalized .
The government had earlier said that the cess was likely to be in line with the current levy of central excise and VAT to ensure that there is no revenue losses to the States . However both the Centre and the States are keen to ensure that they should be able to raise the cess if required but would require clearance from the Council before doing the same .