New Delhi : The Goods and Services Tax (GST) Council today raised the cess on cigarettes over the peak rate of 28 per cent, as the effect on their prices was lower under the new taxation regime, than earlier.
The fixed cess has been hiked between Rs 485 and 792 per thousand sticks and the specific cess on the basis of the length of cigarettes will be effective from midnight today.
After the meeting of the Council through video conferencing, Finance Minister Arun Jaitley said the increase will give the government Rs 5,000 crore more in revenue, which would be used for compensating states.
But, he said the consumer prices would not change as the increased tax incidence would only take away the windfall profits the manufacturers were earning.
According to Mr Jaitley, as per the Council decision today, the peak GST rate of 28 per cent and ad valorem cess of 5 per cent would remain in place.