Summary of Points Finalized in the Meeting

Increase in Compensation Cess on Cigarettes
The Council approved an increase in the Compensation Cess on cigarettes to correct the lower effective tax incidence observed under the GST regime compared to the pre-GST system.

It was noted that under GST, the overall tax incidence on cigarettes had decreased, potentially leading to windfall profits for tobacco companies (approx. ₹5,000 crore/year) and reduced consumer prices — undesirable for a “sin” product.

The increased cess rates were expected to restore pre-GST tax parity and yield about ₹5,000 crore additional revenue annually.

Revised cess rates were approved for various categories of filter and non-filter cigarettes, effective midnight of 17–18 July 2017.
19th GST Council Minutes, pages 2–3, page 3

Support from States and Rationalisation Suggestions

All participating States and Union Territories, including Maharashtra, Assam, Bihar, Gujarat, Kerala, Karnataka, Tamil Nadu, West Bengal, and others, supported the proposal to raise the cess.

Jammu & Kashmir and Goa suggested simplifying the rate structure by reducing multiple slabs and having only two rates — one each for filter and non-filter cigarettes — to ease compliance and reduce classification disputes.

The Chairperson clarified that such rationalisation could be considered later, but the immediate priority was correcting the revenue anomaly.
19th GST Council Minutes, page 2

Other Issues Raised by Members
After the main agenda item, members raised several sectoral and implementation concerns:

West Bengal requested early issuance of cross-empowerment notifications to clarify jurisdiction between Central and State tax officers and raised issues with HSN codes and misclassification of regional food products (e.g., mishti, chocolate sandesh).

Kerala observed that companies were not updating their billing software for destination-based taxation and that rate reductions were not passed to consumers, suggesting vigilance on MRP adjustments.

Puducherry highlighted livelihood concerns due to 28% tax on firecrackers and hand-made matches, affecting thousands of small workers, and requested exemption for fishing nets.

Telangana and Uttarakhand raised concerns about works contracts that began before GST rollout and pending area-based exemption clarifications (58% refund scheme).

Odisha proposed exemption of forest products like sal leaves and sabai grass, traditionally used by tribal communities.

Rajasthan reported strikes in the Marble and Granite sectors and requested that the Fitment Committee address these rate anomalies urgently before the next Council meeting.
19th GST Council Minutes, pages 3–5, page 5

Extension and Clarifications

Maharashtra proposed extending the last date for migration to the Composition Scheme (earlier 22 July 2017) to allow more taxpayers to opt in.

Bihar stressed that notifications should be issued simultaneously by the Centre and States to avoid implementation gaps.

The Chairperson requested all States to submit written suggestions within two to three days for examination by the Fitment Committee.
19th GST Council Minutes, page 5

Next GST Council Meeting Date
It was confirmed that the 20th GST Council Meeting would be held on 5th August 2017, as previously decided in the 18th Meeting.
19th GST Council Minutes, page 5