Cess to yield Rs55K crore in first 9 months of GST rollout

The Centre expects to mop up as much as Rs 55,000 crore by levy of cess, including a big chunk from demerit and luxury goods, during the 9-month period of the current fiscal after the Goods and Services Tax (GST) is rolled out from July 1.

The amount to be raised through cess on coal as well as luxury items and sin goods will be used for compensating states for revenue shortfall following the implementation of the new tax regime.

As per the revenue department's estimates, Rs 22,000 crore is expected to come from cess on coal, lignite and peat in the July-March period of current fiscal. Cess on tobacco is likely to yield around Rs 16,000 crore, a source told PTI. The remaining amount in the 'Goods and Services Tax Compensation Fund' will come from cess on pan masala, aerated drinks and motor vehicles, the source added.

The revenue department is hopeful that funds raised through different kinds of cess would be sufficient to take care any revenue shortfall that the states might face on account of GST rollout.

Internal calculations of the department indicate that there would be a surplus in the compensation fund at the end of March 2018 since big states might not see any shortfall in revenue and it is only the small states which may need to be compensated.