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However, a few state ministers have proposed an additional cess on top of the 40 per cent GST slab, says a PTI report.
West Bengal Finance Minister Chandrima Bhattacharya said her state has proposed a levy on top of the 40 per cent GST rate so that the current tax incidence on ultra luxury goods, like cars, and sin goods, is maintained.
Why do states want cess?
The state ministers are concerned about whether the reduced GST slabs would reduce the total tax collections for the states and are looking at luxury and sin goods for compensation.
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Bhattacharya said the Centre’s proposal did not mention the revenue loss that would accrue to the Centre and states after the implementation of the new GST slabs. She suggested that Section (1) of the GST Act be amended so that a levy can be imposed over and above the 40 per cent maximum permissible rate to ensure that the tax incidence on ultra-luxury and sin goods remains the same even after the slab changes and once the compensation cess ends.
Similarly, Deputy Chief Minister Mallu Bhatti Vikramarka, who was part of the GoM, said that while dispensing with the compensation cess, the GST rates on sin or luxury goods may be increased to their present levels, and the additional amount collected may be given to the respective states.