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GST rollout: Only 7 cesses remain as govt abolishes others via tax law amendments

LiveMint logoLiveMint 07-06-2017 PTI

New Delhi: The finance ministry on Wednesday said it has gradually abolished various cesses on goods and services in the last three Budgets, and 13 more through the Taxation Laws Amendment Act 2017, in the run up to the 1 July rollout of GST.

However, seven cesses will continue to be levied under the Goods and Services Tax (GST) regime since they pertain to customs or goods which are not covered by it.

These are education cess on imported goods, secondary and higher education cess on imported goods, cess on crude petroleum oil, additional duty of excise on motor spirit and diesel oil (road cess), special additional duty of excise on motor spirit and NCCD on tobacco and tobacco products and crude petroleum oil.

In a statement, the finance ministry said that by gradually abolishing various cesses on goods and services it prepared the ground for smooth rollout of GST from 1 July 2017.

“The Central Government has taken this step in stages by abolishing various cesses so that it is easier to fit in various goods and services in different tax slabs for GST,” it said.

In the 2015-16 Budget the government had abolished education cess, including secondary and higher education cess on taxable services. In 2016-17 Budget, it abolished cess on cement, strawboard. Also by amending Labour Welfare Cess Act, 1976, three cesses—Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines were abolished.

Tobacco cess was removed by amending the Tobacco Cess Act 1975, and Cine Workers Welfare Cess was abolished by amending the Cine Workers’ Welfare Cess Act 1981 among others.

In the 2017-18 Budget, the Central Government abolished Research and Development (R&D) cess by amending the Research and Development Cess Act.

Further through the Taxation Laws Amendment Act 2017, the 13 cesses were abolished. These included clean energy cess, Swachh Bharat cess, infrastructure cess, Krishi Kalyan cess on rubber, beedis, tea, sugar, water consumed by certain industries and by local authorities and that on manufactured jute goods.

Parliament had in April cleared the Taxation Laws Amendment Act 2017, which amends the customs and excise acts to make them compliant with the new GST regime. “However, the date of the implementation will coincide with the date of the GST roll-out,” the ministry said.

The government plans to roll out GST, the biggest taxation reform since Independence, from July 1. It will subsume 16 different levies, including excise, VAT, service tax and other local levies.

The Centre and states have agreed for a four tier GST tax rate—5%, 12%, 18% and 28%—and has fitted all most all goods and services in various slabs.

Besides, on top of the 28% rate a cess would be levied on luxury and demerit goods.

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