Confident of the GST rollout, the government gradually abolished various cesses on goods and services starting 2015-16 to ensure smooth shift to the new indirect tax regime from July 1.
It decided to scrap 13 cesses on items like rubber, tea and coal through the Taxation Laws Amendment Act 2017.
Its implementation will coincide with the launch of GST next month.
However, the government will continue to levy seven cesses in the new tax regime as they pertain to customs or goods, which are not covered under the GST regime such as crude oil and high-speed diesel.
In the last three budgets since 2015-16, the government discontinued various cesses, preparing the ground for the smooth rollout of the country’s biggest tax reform.
“The central government has taken this step in stages by abolishing various cesses so that it is easier to fit in various goods and services in different tax slabs for GST," the finance ministry said.
In the budget for 2015-16, the Centre abolished education cess, including secondary and higher education cess on taxable services.
The next year, it removed cess on cement and strawboard. By amending the Labour Welfare Cess Act, 1976, it abolished cess on iron ore , manganese ore and chrome mines. Tobacco cess was removed by amending the Tobacco Cess Act 1975, and cine workers welfare cess by amending the Cine Workers’ Welfare Cess Act, 1981.
In the budget for 2017-18, the government abolished research and development cess by amending the Research and Development Cess Act. Further through the Taxation Laws Amendment Act 2017, the 13 cesses were abolished. These included Swachh Bharat cess, clean energy cess, infrastructure cess, krishi kalyan cess on rubber, beedis, tea, sugar, water consumed by certain industries and by local authorities and on manufactured jute goods.
Parliament had in April cleared the Taxation Laws Amendment Act 2017, which amends the customs and excise Acts to make them compliant with the GST regime. But the date of implementation will coincide with the date of GST rollout.
The all-powerful GST council has fitted almost all the goods and services in the four-tier slabs of 5, 12, 18 and 28 per cent in the new tax regime.
