Fitment panel to examine paan masala cess structure

The fitment panel, comprising revenue officials of both the Centre and states, will examine the tax structure for the compensation cess on evasion-prone commodities, such as paan masala and assorted tobacco products, and whether differential tax rates may well be rationalised, a government official told Business Standard.

- SHRIMI CHOUDHARY

The move follows report a by a Group of Ministers (GoM) proposing a change to the cess component of the tax, which is to be linked with the maximum retail price (MRP) at which these products are sold to consumers.

The Goods and Services Tax (GST) Council, at its February meeting, approved a report by the ministerial panel, led by Odisha Finance Minister Niranjan Pujari.

At present, such items attract the highest GST rate of 28 per cent, along with a compensation cess.

The cess component of the tax is currently based on the actual transaction (sales) value of the item (ad valorem tax).

For instance, the rate of cess on tobacco products is 290 per cent, while that on paan masala 135 per cent.

The panel report, however, pitches for a specific tax rate based on the retail sale price, which subsumes all taxes, local or otherwise, freight charges, delivery, packaging, etc, while GST continues to be levied on transaction value.