GST council clears last two bills, caps cess on demerit goods

GST council has cleared the state and union territory GST bills and capped cess on luxury cars (15%), aerated drinks (15%) and cigarettes (290%).

GST council on 16th March gave its nod to the two remaining pieces of supporting legislation for implementing the landmark tax reform, paving the way for their introduction in Parliament and state legislatures.

The GST council also agreed to cap the cess on various so-called demerit (or sin and luxury) goods in the legislation. The cess on colas and cars has been capped at 15%.

In the case of cigarettes and chewing tobacco, the cess levied could be either 290% or Rs 4,170 per thousand sticks or a combination of both.

The council also decided to make the tax treatment of items produced in special economic zones (SEZs) similar to that on exports. Procurement of supplies by SEZs will be zero-rated. In the earlier draft, SEZs would have had to pay the tax and then claim a refund.

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