The highest rate of GST can be increased to 60 percent. This is 40 percent right now. The major reason for this is the expiry of the compensation cess. It will expire on 1 April 2026. Many government sources gave this information. The GST system came into force on July 1, 2017. The GST system was then started a compensation cess to compensate the damage to the states in the revenue.
Consent has been reached in GOM
Companies cess (Compensation cess) Group of ministers formed on (Gom) The proposal has been agreed to merge the compensation cess in GST rates. Even after the cess is removed, there will be no change in tax on more revenue items like automobiles, tubaco and aerated drinks. A source of the government said, “The cess cannot continue after March 2026. So the rates will have to be increased to stop the reduction in revenue. This will require amendment, as more than 40 percent now GST Can not be applied. This can be increased to 60 percent. “
In addition to GST rate, there seems to be a compensation cess
The GST compensation cess seems to be 28 per cent in addition to a maximum standard rate. Sin products and luxury goods see this cess. The government had taken a loan to the states to compensate for the damage caused by the system of GST. Companies cess was started to repay this debt. Currently, the highest rate of GST can be 40 percent. However, this rate has not been used yet. Due to the compensation cess, the tax on many items is already high.
Companies cess on these items
Several items including SUVs and Aerated Drinks are compassed cess. Its rate on SUV is 22 per cent, while aurateted drinks cost 12 per cent. The rates of compensation cess on Tubaco and other such products are different. The total tax increases to 55-60 percent by imposing a compensation cess on cigarettes. The calculation of the cess is on the taxable value of the goods and in some cases on the basis of quality.
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Decision may be taken in the next meeting of GST Council
The decision on the Companies Cess may be in the next meeting of the GST Council. The date of the next meeting has not been decided yet. However, it is expected that the GST Council will meet before the monsoon session of Parliament.