40% GST slab: Cess backlog hits cigarette, aerated drink distributors

Federation writes to FinMin, says 40% GST move straining liquidity

Distributors have written to the Ministry of Finance over the accumulation of cess on aerated drinks and cigarettes, saying the shift to a 40 per cent goods and services tax (GST) rate is creating a liquidity crunch in the supply chain.

 

In the old GST regime, both items were taxed under the 28 per cent slab plus a 12 per cent compensation cess. They now fall under a flat 40 per cent rate. However, the cess component on previously purchased stock has created a large pool of unutilised input tax credit (ITC), the distributors pointed out.

 

According to the All