Not only are "sin goods" like pan masala, cigarettes, carbonated beverages, and vehicles subject to the highest 28 percent tax, but they also have to pay the GST compensating cess.
Cess collections have risen faster than expected because of robust GST receipts.
Even after the states have paid back the loans they obtained during the Covid period, a robust goods and services tax (GST) compensation cess can bring the Center an unexpected amount of Rs 70,000 crore, according to The Economic Times.
Not only are "sin goods" like pan masala, cigarettes, carbonated beverages, and vehicles subject to the highest 28 percent tax, but they also have to pay the GST compensating cess.
"If collection trends continue, we should be able to prepay all of the loans well in advance of the March 2026 deadline and still have roughly Rs 65,000–70,000 crore left over," a senior official told ET.
The information could not be independently verified by Moneycontrol.
The sum is determined by estimating revenue before the FY25 budget is presented. The article said that while the Centre has not yet decided how to use this extra cess revenue, officials expect to address it when the rate rationalization debate begins on June 22 at the GST Council meeting.
The Cess Collection Process
At the 52nd GST Council meeting in October 2023, Finance Minister Nirmala Sitharaman said that the group may determine how to collect cess after the tax expires in March 2026.
The Centre assured states a 14 percent CAGR in tax collection for five years starting on July 1, 2017, the date of the GST implementation. As to the study, the compensating cess collections were supposed to compensate for any shortfall.
The compensation for the states had run out in June 2022 after five years, but it was extended till March 31, 2026, it said, to pay the interest and principle on the Rs 2.69 lakh crore that the Center had borrowed during the Covid period to make up the deficit in the cess fund.
Cess collections have risen faster than expected because of robust GST receipts. According to ET, the deadline was set based on tendencies in the first five years of collection.
A total of Rs 12,284 crore in GST cess was collected in May, of which Rs 1,076 crore came from the import of goods. The cess generated revenue for the Center of Rs 1.45 lakh crore in FY24. It also said that the FY25 target, as stated in the interim budget, is Rs 1.5 lakh crore.
No comments:
Post a Comment