Seeks to further amend notification No. 1/2017-Compensation Cess (Rate), dated 28th June, 2017

Amendments to Compensation Cess Rates under Section 8 of the GST (Compensation to States) Act, 2017

The Government of India has issued Notification No. 2/2023-Compensation Cess (Rate) on March 31, 2023, to amend the existing notification No. 1/2017-Compensation Cess (Rate) dated June 28, 2017. This amendment is made under the powers conferred by sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017, on the recommendation of the GST Council.

The amendments involve changes in the compensation cess rates for various goods listed in the schedule. For instance, the rate for certain tobacco products and other goods has been adjusted, with new rates specified per unit such as "0.32R per unit" for some items and "0.36R per unit" for others. Additionally, new entries have been added to the schedule, such as "Homogenised or reconstituted tobacco" and "All goods, other than pan masala containing tobacco 'gutkha'," with specific cess rates.

The notification clarifies that "R" in the rate column refers to the "retail sale price" as defined in the GST (Compensation to States) Act, 2017. An illustration is provided for calculating the compensation cess on Pan Masala, demonstrating how the rate applies to the retail sale price.

This notification takes effect from April 1, 2023, and was issued by Vikram Vijay Wanere, Under Secretary to the Government of India. The principal notification was previously amended by notification No. 1/2023-Compensation Cess (Rate) on February 28, 2023.