Cess on demerit good a departure from GST concept – Goods and Services Tax – GST – Dated:- 19-10-2016 – The proposed structure of levying cess on ultra-luxury and sin goods is a departure from the GST concept as envisaged initially and the Centre would have absolute powers in future to alter the cess rate, which could go up to 2 per cent, experts said. The GST Council yesterday mooted a four-slab GST tax structure of 6, 12, 18 and 26 per cent with lower rates for essential items and the highest for luxury goods that will also be levied with an additional cess. Cesses are being subsumed under GST and hence the levy of a new cess was a complete surprise. Proposal to have 5 rate structure is not aligned to the concept of simplified tax regime
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on, the cess rate will likely come to between 1-2 per cent, Nangia & Co Director Rajat Mohan said. Deloitte Haskins & Sells LLP Senior Director (Indirect Tax) M S Mani said that as a concept cess does not go well with the original idea of Goods and Services Tax (GST). Possibly they want to avoid a fifth tax slab and hence they brought the concept of cess. Cess would be helpful in a way that the rate of cess can be very easily altered whenever the Centre wants without consultation with state, Mani said. As per the proposed GST rate structure, the Centre plans to create a ₹ 50,000 crore pool to be used to compensate the states for revenue loss arising out of implementation of GST. The amount would be raised by imposing cess over
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