India’s central government has removed additional cess on goods and services included in the last three General Budgets – 2015-16, 2016-17 and 2017-18, as per a notification by the Finance ministry on June 7, 2017, to ensure the smooth rollout of the new Goods and Services Tax (GST) under the new tax regime.
Through the Taxation Law Amendment Act 2017, The Industries (Development and Regulation) Act 151 – cess on automobiles (cars and motorcycles) will no longer be applicable. This comes at a stage when the industry has started to gear up for the new tax regime, further strengthening the July 1, 2017 rollout of GST.
While ess on Rubber last amended in The Rubber Act, 1947 empowered central government to levy cess at a rate not exceeding Rs2 per kg is abolished and will no longer be applicable under GST.
According to Binaifer F. Jehani, director, Industry & Customised Research, CRISIL Research, the current Rs2 per kg cess on rubber amounts to 1.5% of rubber price. Removal of this cess will help reduce the cost for tyre companies by ~40bps.
The tyre industry is the major consumer of rubber as 40% of its raw material consists of natural rubber.
The central government in its General Budget 2015-16 had abolished Education Cess, including Secondary and Higher Education Cess on taxable services, and exempted Education Cess on excisable goods as well as Secondary and Higher Education Cess on excisable goods.
In its General Budget 2016-17, the central government abolished cess on cement, strawboard, three cesses including cess on Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines by amending Labour Welfare Cess Act, 1976, Tobacco cess by amending the Tobacco Cess Act 1975, and Cine Workers Welfare Cess by amending the Cine Workers’ Welfare Cess Act 1981 among others.
For the General Budget 2017-18, the central government abolished Research and Development cess by amending the Research and Development Cess Act.