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New Cess to Fund Health and National Security
1 Dec
Summary
- A new cess bill is being introduced in Parliament today.
- This cess will apply to the production capacity of cigarettes, gutkha, and Pan Masala.
- It will replace the current compensation cess on these tobacco products.
Finance Minister Nirmala Sitharaman is expected to introduce a significant "Health Security se National Security Cess" bill in Parliament today. This new levy is designed to impact the production capacity of cigarettes, gutkha, and Pan Masala, including machines and processes involved.
The proposed cess will supersede the current compensation cess. Currently, these products face a 28% GST along with a compensation cess that varies significantly. The introduction of this new cess will likely adjust the total tax incidence, though the final consumer price is expected to remain largely unchanged as the additional tax is absorbed.
This move by the government also includes provisions for future adjustments, allowing for rate hikes and the inclusion of additional products under the cess. Stocks of major tobacco companies like ITC Ltd., Godfrey Phillips Ltd., and VST Industries Ltd. are anticipated to be affected by this development.
