Notification No. 03/2017 – Compensation Case (Rate) Updated

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Notification No. 03/2017 - Compensation Cess (Rate): Seeks to amend notification No. 1/2017 - Compensation Cess (Rate), dated 28th, June, 2017 so as to increase the Compensation Cess rates on cigarettes as mentioned in the notification with effect from 18th, July, 2017

GST: [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]

G.S.R. (E).- In exercise of the powers conferred by sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720 (E), dated the 28th June, 2017, namely

In the said notification, in the SCHEDULE,-

against S. No. 10, for the entry in column (4), the entry “5% + Rs. 2076 per thousand” shall be substituted;

against S. No. 11, for the entry in column (4), the entry “5%+ Rs. 3668 per thousand ” shall be substituted;

against S. No. 12, for the entry in column (4), the entry “5% + Rs. 2076 per thousand” shall be substituted.

against S. No. 13, for the entry in column (4), the entry “5% + Rs. 2747 per thousand” shall be substituted;

against S. No. 14, for the entry in column (4), the entry “5% + Rs. 3668 per thousand” shall be substituted;

against S. No. 15, for the entry in column (4), the entry “36% + Rs. 4170 per thousand” shall be substituted.

2. This notification shall come into force with effect from the 18^th day of July, 2017.

(Mohit Tewari)
Under Secretary to the
Government of India

Note: The principal notification No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720(E).

📚 Frequently Asked Questions (FAQs): Notification No. 03/2017 - Compensation Cess (Rate)

Q1. What is Notification No. 03/2017-Compensation Cess (Rate)?

Answer: It is an amendment notification issued on 18 July 2017.
The notification increased Compensation Cess rates on various cigarette categories by amending Notification No. 01/2017.

Q2. When did the revised rates become effective?

Answer: The revised rates became effective from 18 July 2017.
The notification specifically states that it came into force on that date.

Q3. Which products were affected?

Answer: Various categories of cigarettes.
The notification revised rates applicable to serial numbers 10 to 15 of the original schedule.

Q4. Why were the rates increased?

Answer: To maintain appropriate taxation levels on tobacco products.
The amendment helped address concerns about reduced tax incidence after GST implementation.

Q5. Did the notification create a new cess?

Answer: No.
It only revised the rates under the existing Compensation Cess framework.

Q6. What is the meaning of “per thousand” cess?

Answer: It refers to a fixed cess amount payable for every thousand cigarettes.
This is separate from the percentage-based cess component.

Q7. What is the highest revised cess rate under this notification?

Answer: Entry 15 was revised to 36% plus ₹4,170 per thousand cigarettes.

Q8. Does Compensation Cess apply in addition to GST?

Answer: Yes.
Compensation Cess is levied over and above applicable GST.

Q9. Who was most affected?

Answer: Cigarette manufacturers, distributors, wholesalers, and retailers.
The revised rates impacted pricing and tax calculations throughout the supply chain.