India is second largest sugar producer in the world after Brazil. India is the nation of festivals, where we celebrate each and every occasion by sharing sweets, when we started or entering into new relations, firstly we say ” Kuch Meetha Ho Jaye”, So, Before we understand why Govt. is likely to introduce sugar cess, firstly we should know what is sugar cess:
Sugar Cess is tax which is likely be levied by CBIC (Central Board of Indirect Tax & Customs) (Formerly known as Central Board of Excise & Custom) under the guidance of finance ministry chaired by Sh. Arun Jaitely under GST. One should also note that, it is against the principals of GST law.
It is postponed by council members for few time, however it will be surely levied.
Let us understand this in details, During last few months especially 7-8 months production of Cane shows bumper growth due to good weather conditions, so, due to this sugar production raised. Now economy and law of demand & supply comes, when supply increase with constant demand , prize tends to fall, according to Indian Sugar Mill Association (ISMA) prizes of sugar falls by Rs 9/- per Killo (i.e. Rs 26-28) in recent past, however cost of production of sugar is Rs 35/- per killo. The factories have gone into losses with decline in prize followed by arrears in payment of cane farmers. So , this step of collecting sugar cess is meant to meant cane farmers on behalf of mill owners.
It is likely to propose that sugar cess will be levied @ 5%, it is to be noted that it is over and above current 5% GST on sugar.
It is likely to propose that Rs 5.5o/- Per Quintal of cane crushed in sugar season 17-18, will be given to mill owner for payment to farmers.
Country like India will face very negative impact of this cess, because there will be no credit allowed on payment of cess, also levy of cess leads prize rise which put extra burden on the pocket of end consumers, prize of common product like sweets, chocolates, confectioneries etc. item will rise.
Most Probably Govt. will reduce current GST rate 18% to 12% on ethanol to mitigate prize rise by introducing sugar cess for the sake of end users.
Watch my You Tube channel “GST SATHI” for GST updates