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tax on tax), GST was introduced with effect from 1 July 2017 (which has subsumed VAT, Excise duties such as BED and AED) Under the GST regime, cigarettes are taxed at 28% This is in line with the Fitment committee recommendations that the GST rates on cigarettes maybe kept at 28% (in line with the weighted average VAT rate of 28.7%) In addition, the committee also recommended that a Compensation Cess maybe levied on cigarettes at rates equal to 1.05 times the specific excise duty rates [net of natural calamity contingency duty ('NCCD')] On 28 June 2017, the GOI notified the compensation cess rates as below @: @ Compensation cess rates were notified vide Notification No 1/2017 - Compensation Cess (Rate), dated 28 June 2017 under section 8(2) of the Goods and Service Tax (Compensation to States) Act, 2017 However, this method of setting compensation cess did not take into account the cascading effect of tax in the earlier regime (ie, VAT was being charged on the value including excise duty)

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