Additional cess on demerit goods termed 'wrong principle'

The Dollar Business Bureau

Levying additional cess on demerit goods under the GST regime has been termed as “wrong principle” by a section of business community citing  the move will defeat the very purpose of unified taxation.

According to MCC Chamber of Commerce and Industry president Hemant Bangur, the practice is bound to open the doors for various types of cess in the future, thus complicating the matter even further.

The move has been announced by the government on the first day of the GST Council meet. The discussion focussed on imposing a four-slab GST tax structure of 6, 12, 18 and 26 per cent with lower rates for essential items and the highest for luxury and demerit goods that will also be levied with an additional cess. The industry has countered it saying it will pave way for inflation while benfitting the states at the same time.

Ultra-luxury items include high-end cars and demerit goods comprise tobacco, cigarettes, aerated drinks, luxury cars and polluting items.

As per Bharat Chamber of Commerce president Rakesh Shah, the government has to adopt the mechanism as it has no option to charge higher tax on luxury items and demerit more than 26%, which is the highest rate.