Compensation cess on Unmanufactured tobacco. S

This query is : Resolved

ASHWIN JOSHI (Querist)
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08 April 2023 Sir
We are engaged in packing of Unmanufactured tobacco with our brand name.
We were paying 28% GST + 71% compensation cess.
Any changes from 1st April 2023.
Please let us know. Mahesh tobacco company.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 As of April 1, 2023, the GST rates and compensation cess on unmanufactured tobacco have been revised as follows:

1. **GST Rate:** The GST rate on unmanufactured tobacco has been reduced to 18% from the previous 28%. This lower rate applies to unmanufactured tobacco falling under the HSN code 2401.

2. **Compensation Cess:** The compensation cess on unmanufactured tobacco remains unchanged. It continues to be levied at a rate of 71%.

### Impact on Mahesh Tobacco Company:

- **Lower GST Rate:** With the reduction in GST rate from 28% to 18%, Mahesh Tobacco Company will benefit from a lower tax incidence on its sales of unmanufactured tobacco.

- **Unchanged Compensation Cess:** The compensation cess remains the same at 71%, ensuring continuity in the overall tax structure applicable to unmanufactured tobacco.

### Action Steps:

- **Update Accounting Systems:** Ensure that your accounting systems and invoices reflect the revised GST rate of 18% for unmanufactured tobacco.

- **Compliance:** Verify with your tax consultant or GST advisor to ensure compliance with the latest GST rates and cess for unmanufactured tobacco under the updated regime.

These changes aim to streamline the tax structure and potentially reduce the tax burden on businesses dealing with unmanufactured tobacco. It's advisable to stay updated with any further notifications or changes from the GST council or tax authorities that may impact your business operations.