Now paan masala, cigarette and tobacco, government are taxing more than 40% tax!

News India Live, Digital Desk: GST on Tobacco: If you consume products like pan masala, cigarette or tobacco, then the burden on your pocket is going to increase even more. The government is preparing to impose the biggest tax ever on these ‘SIN Goods’ i.e. harmful items. According to a new report, in addition to the current 28% GST and compensation cess on these products, now additional fees will be levied, due to which the total tax rate can go up to more than 40%.

Why is tax increasing?

The reason behind this major change is the closure of GST compensation to the states. When GST was implemented in 2017, the central government promised the states that any revenue loss will be repaid for the next five years. To collect money for this compensation, a compensation cess was installed on things like cigarette, tobacco and paan masala.

Now this compensation period is ending. In such a situation, the central government is finding a new way to maintain the revenue of the states. The plan is that a new “additional fee” should be replaced by eliminating the compensation cess.

How expensive everything will be?

Currently, these products cost the highest GST rate of 28%. There is also a compensation cess on it. Now the new additional fee is proposed to be imposed on either the price of the goods (AD-Valorem) or a certain amount (specific duty).

According to sources, the GST law will also be changed to impose this new fee. This simply means that the government will have the right to collect more than 40% tax on these products. Due to this, the retail prices of all these things are sure to increase drastically.

There are two big motives behind this move of the government. First, ensure a permanent source of revenue for states. And second, make the harmful items so expensive to these health that people avoid using them. That is, there is a preparation to target two targets with one arrow.