Tobacco products, including pan masala, cigarettes, and other kinds of smoking, are subject to a maximum rate of GST compensatory cess that has been set by the government and is based on the retail selling price of those products and the price of natural gas can be fixed

The Finance Bill, 2023, which was approved by the Lok Sabha last Friday, had changes that included a ceiling on the cess rate. The highest GST compensation rate for pan masala will now be 51% of the unit’s retail sale price, in accordance with the change. The cess is now assessed at a rate of 135% ad valorem. Tobacco is priced at 74,170 per thousand sticks + 290 percent ad valorem or 100% of the unit’s retail sale price. The highest rate recorded thus far was 14,170 per thousand sticks + 290 percent ad valorem. The cess is assessed in addition to the top Goods and Services Tax (GST) rate of 28%. The maximum cess that may be levied on Pan masala and tobacco goods has been restricted as a result of amendments to Schedule I of the GST Compensation Cess Act that were included in the Budget Bill.

Tax experts, however, stated that the GST council will need to publish a notification in order to determine the precise compensation cess applicable as a result of this move. The most recent change to the legislation governing the GST Compensation Cess is a facilitator that will allow the GST Council to announce relevant tax rates by notification. This modification represents a significant change in taxation policy for enterprises that supply tobacco and pan masala.

Although this approach will significantly reduce tax evasion in this industry, it may nevertheless turn out to be a regressive strategy from an economic perspective, according to Mohan. The report of a panel of state finance ministers on stopping tax fraud in the pan masala and AMRG & Associates gutkha companies was accepted by the GST Council, which is led by Finance Minister Nirmala Sitharaman and is made up of state equivalents, in February.

With effect from April 1, the government increased the customs charge on the import of X-ray equipment and non-portable X-ray generators to 15%. Presently, import duties of 10% are applied to both portable and non-portable X-ray generators and equipment. Customs duty rate modifications were implemented as part of the Finance Bill, 2023 revisions.

Along with this, The cost of natural gas generated in the nation may soon be capped by the Union Cabinet. The goal, according to sources, is to reduce the price. Both compressed natural gas (PNG) and compressed gas (CNG) are made from domestic natural gas. Twice a year, the government sets the price of domestic natural gas. Gas generated from new deep-sea fields and gas produced from older fields is priced differently. Following the Ukrainian War, global energy costs increased, which caused local petrol prices to reach all-time highs. A fixed price of US$ 8.57 per million British thermal units (MMBtu) for gas from old fields and $12.46 MMBtu for gas from challenging fields is now in effect. These prices will change on April 1. According to sources, the price of petrol from ancient fields might increase to $10.7 per MMBtu using the present formula. The cost of petrol in challenging terrain will be somewhat altered. It will rise even more if there is a change.