Why is GST cess imposed?

GST cess is imposed on the supply of goods or services to provide compensation to the States for loss of revenue due to the implementation of GST in India. If any funds are unutilised, then at the end of the transition period, it would be shared equally by the Central and State Government.

State Government’s share will be distributed in the ratio of their total revenues from State Tax on the goods and services in the last year of the transition period

Sr.No.	Descripttion of supply	HSN code	Rate for GST Compensation Cess
1	Pan Masala	2106 90 20	60%
Aerated waters, containing added sugar or other		2202 10
sweetening matter or flavoured		2202 10
2	Aerated waters	2202 10 10	12%
3	Lemonade	2202 10 20	12%
4	Others	2202 10 90	12%
Tobacco and Tobacco Products		24
5	Unmanufactured tobacco (without lime tube) –	2401	71%
5	bearing a brand name	2401	71%
6	Unmanufactured tobacco (with lime tube) –	2401	65%
6	bearing a brand name	2401	65%
7	Tobacco refuse, bearing a brand name	2401 30 00	61%
8	Tobacco refuse, bearing a brand name	2401 30 00	160%
9	Chewing tobacco (with lime tube)	2403 99 10	142%
10	Filter khaini	2403 99 10	160%
11	Jarda scented tobacco	2403 99 30	160%
12	Pan masala containing tobacco ‘Gutkha’	2403 99 90	204%
Cigarettes	Tobacco refuse, bearing a brand name	2401 30 00	61%
13	Non- filter
14	Not exceeding 65 mm	2402 20 10	5% + Rs.1591 per thousand
15	Exceeding 65 mm but not 70 mm	2402 20 20	5% + Rs.2876 per thousand
16	Filter
17	Not exceeding 65 mm	2402 20 30	5% + Rs.1591 per thousand
18	Exceeding 65 mm but not 70 mm	2402 20 40	5% + Rs.2126 per thousand
19	Exceeding 70 mm but not 75 mm	2402 20 50	5% + Rs.2876 per thousand
20	Others	2402 20 90	5% + Rs.4170 per thousand
Other tobacco products
21	Cigar and cheroots	2402 10 10	21% or Rs. 4170 per thousand, whichever is higher
22	Cigarillos	2402 10 20	21% or Rs. 4170
22	Cigarillos	2402 10 20	per thousand, whichever is higher
23	Cigarettes of tobacco substitutes	2402 90 10	Rs.4006 per thousand
24	Cigarillos of tobacco substitutes	2402 90 20	12.5% or Rs. 4,006 per thousand whichever is higher
25	Other	2402 20 20	12.5% or Rs. 4,006 per thousand whichever is higher
26	‘Hookah’ or ‘gudaku’ tobacco tobacco bearing a brand name	2403 11 00	72%
27	Tobacco used for smoking ‘hookah’or ‘chilam’ commonly known as ‘hookah’ tobacco or ‘gudaku’	2403 11 00	17%
28	Other smoking tobacco not bearing a brand name.	2403 11 90	11%
29	Smoking mixtures for pipes and cigarettes	2403 19 10	290%
30	Other smoking tobacco bearing a brand name	2403 19 90	49%
31	“Homogenised” or “reconstituted” tobacco, bearing a brand name	2403 91 00	72%
33	Preparations containing chewing tobacco	2403 99 20	72%
34	Snuff	2403 99 40	72%
35	Preparations containing snuff	2403 99 50	72%
36	Tobacco extracts and essence bearing a brand name	2403 99 60	72%