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Over two weeks into the goods and services tax (GST) regime, the all powerful GST Council have met on Monday, July 17, 2017 to take stock of the implementation of the new indirect tax and GST tax rate on Cigarette.

This was the first meeting of the Council since the launch of the GST on 1 July and the 19th since it was set up in September last year. But unlike the earlier meetings, when the states and the centre used to sit across the table and decide on a plethora of issues, this time the interaction have happened through video conferencing

Time for GST

After the last Council meet on 30 June, it was decided that next meeting will happen on 5 August. But the date of the meeting, person aware of the development said, was advanced as the council wanted to take stock of the situation post the rollout and get a nation-wide report. Over the last two weeks, the ministry has been issuing clarifications on doubts raised by industry.

Besides, revenue secretary Hasmukh Adhia has held a marathon sixday ‘GST Master Class’ for businesses and traders explaining the rules of the new tax regime and answering their queries online. The finance ministry had earlier said the GST has been implemented “without any major problems being reported” from the field offices.

The ministry has also asked businesses to register themselves for the new indirect tax regime by logging on to the GST common portal latest by 30 July.

The meeting, called at a short notice, would be chaired by Finance Minister Arun Jaitley through video-conferencing as state Finance Ministers were not in the national capital.



The goods and services tax (GST) Council on Monday hiked cess on cigarettes to take away the windfall manufacturers were reaping due to an anomaly that crept in after the GST rate fixation, finance minister Arun Jaitley said.

While the peak GST rate of 28% stays and so does 5% ad valorem cess on top of it, the fixed cess has been hiked between Rs 485 and Rs 792 per thousand sticks. The increase in cess would bring in Rs 5,000 crore of additional tax revenue which otherwise would have gone to the manufacturers, he said briefing reporters after the council held an emergency meeting through video conferencing.

The GST Council had in May fixed 28% as the top rate for cigarettes. A 5% ad valorem cess was levied on top of it and Rs 1,591 per thousand sticks as fixed cess on both filter and non-filter cigarettes of notexceeding 65mm length. The cess rate varied from Rs 2,126 to Rs 4,170 for cigarettes of different lengths. But this rate was lower than the pre-GST tax incidence and the choice before manufacturers was either to pass on the lower taxes to consumers by way of cutting rates or pocketing the windfall. The manufacturers chose the latter.

Jaitley said to correct this, the GST Council has raised the fixed cess by Rs 485 to Rs 792 per thousand sticks. Consumer prices will, however, not change as the increased tax incidence would only take away the windfall profits the manufacturers were earning.

The GST Council meeting reviewed the compensation cess rates on cigarette & recommended the following increase in the same w.e.f. 00 Hrs on July 18, 2017

HSN Code Description Present Rate Proposed Increase New Rate

Non Filter

24022010 <65 mm 5% + Rs 1591 per thousand Rs 485 per thousand 5% + Rs 2076 per thousand
24022020 65 -70 mm 5% + Rs 2876 per thousand Rs 792per thousand 5% + Rs 3668 per thousand


24022030 <65 mm 5% + Rs 1591 per thousand Rs 485 per thousand 5% + Rs 2076 per thousand
24022040 65 -70 mm 5% + Rs 2126 per thousand Rs 621 per thousand 5% + Rs 2747 per thousand
24022050 70-75 mm 5% + Rs 2876 per thousand Rs 792 per thousand 5% + Rs 3668 per thousand
24022090 Others 5% + Rs 4170 per thousand 31 % thousand 36% + Rs 4170 per thousand

What Next?

GST Council will meet in first week of August to review the progress of the implementation of GST, which was rolled out on 1 July.

[Views & Opinions Expressed are strictly personal]


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Gaurav Agarwal Practicing Chartered Accountant Specialised in upcoming GST and its implementation has vast experience in rendering Taxation & advisory Services. He handled several assignments related to Insurance Companies, Automobile, Real Estate, Manufacturing industries and Banks etc. Mr Ga View Full Profile

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