The Central government has gradually abolished several cesses on goods and services in preparation to roll out the Goods and Services Tax (GST) on July 1st. The cesses have been abolished since the 2015-16 budgets with aim of making it easier to fit goods and services in different tax slabs under GST.
The Education Cess, including Secondary and Higher Education Cess on taxable services, had been abolished in the government’s General Budget 2015-16.
The General Budget 2016-17 saw cesses on three ore mines – iron ore mines, manganese ore mines and chrome ore mines – being abolished through an amendment in the Labour Welfare Cess Act, 1976. Tobacco cess was also abolished by amending the Tobacco Cess Act, 1975.
In government’s General Budget 2017-18, Research and Development cess was abolished by amending the Research and Development Cess Act, 1986.
The government has also implemented the Taxation Laws Amendment Act, 2017 to abolish various cess and duties charged on imported goods. The new act narrows the list of goods which attract Central Excise Duty. Currently, tobacco, petroleum products, rubber, oils, and vehicles among others attract the duty. With the roll out of GST, only petroleum products such as motor spirit, high speed diesel, aviation turbine fuel, and tobacco products will attract excise duties.