Is it true that India is extending the GST surcharge on luxury products and cigarettes?
Answer
Answer
That is absolutely correct. The GST Council on Monday approved the extension of surcharge on taxes on luxury goods including cars and tobacco products well beyond 2022. This is likely to help states repay loans raised to meet revenue shortfalls this year.
The original time frame for the cess was 5 years, which expires in 2022. Now the cess can go well beyond 2022. Analysts are expecting more granular details on this subject in the next meeting of the GST council scheduled to be held on 12 October.
The surcharge on luxury goods ranges from 12% to 200%. GST revenues are already under pressure as India GDP is expected to contract by 10-12% in FY21. Cigarettes have long been a low hanging whipping boy and that is set to continue for the time being.