Surcharge on cars, tobacco extended beyond June 2022

The GST Council on Monday decided to extend the surcharge on taxes over luxury goods such as cars, and tobacco products beyond June 2022, but failed to reach a consensus on ways to compensate states for loss of tax revenue. Sitharaman said the GST Council agreed to extend the levy of compensation cess beyond five years.

The surcharge on cars and other luxury goods and tobacco products varies from 12 per cent to 200 per cent on top of the highest GST rate of 28 per cent. It was due to expire in June 2022. She, however, did not give the duration for which this levy has been extended.

Briefing reporters, Sitharaman said that the proposal on collection of cess should be beyond 5 years was cleared. Sitharaman said that some states wanted that the Centre calculates the GST shortfall amount at Rs 1.10 lakh crore, instead of Rs 97,000 crore. This was agreed to by the Centre before the 42nd meeting of the Council.

She said it will tonight release Rs 20,000 crore to states on account of GST compensation dues. Sitharaman said Rs 24,000 crore would be released by the middle of next week to those states which have received less IGST share against their actual dues. Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss. Finance Secretary Ajay Bhushan Pandey said with effect from January 1, 2021, GST refunds would be paid/disbursed in a validated bank account linked with the PAN and Aadhaar of the registered taxpayer.