GST Increased from 12% to 18% for Cigarette Filter Rods

At its 25th meeting on 18 January 2018, the GST Council recommended increasing GST on cigarette filter rods classified under HSN 5601 22 00 from 12% to 18%. The change was implemented through rate notifications effective 25 January 2018.

Goods affected by the January 2018 GST increase

Why was the rate increased?

The Council's fitment papers identified an inverted-duty issue: cigarettes attracted a higher GST rate than the cigarette filter rods used in their manufacture. The proposed 18% rate for filter rods was intended to address this mismatch. The Council recommendation itself did not independently change the law; the relevant tax-rate notifications supplied the legal effect.

Relevant GST provisions explained

Section 9(1) of the CGST Act, 2017

This provision authorises levy of central GST on intra-state supplies of goods or services at notified rates, on the recommendations of the GST Council, subject to statutory limits and exceptions. State GST is charged under the corresponding State GST legislation.

Section 5(1) of the IGST Act, 2017

This provision governs integrated GST on inter-state supplies at rates notified by the Central Government on Council recommendations, subject to the applicable statutory framework.

HSN 5601 22 00

The tariff classification identifies the cigarette filter rods covered by the January 2018 rate change. Classification must be assessed using the tariff description and applicable interpretative rules; the fact that a product is used in cigarette manufacture does not by itself settle its HSN.

Notifications and legal effect

The change was made within the framework of Notification No. 1/2017-Central Tax (Rate), dated 28 June 2017, as amended by the January 2018 rate notifications, including Notification No. 6/2018-Central Tax (Rate), dated 25 January 2018. The corresponding integrated and state tax notifications must also be considered as applicable. The CBIC rate schedule records cigarette filter rods under Schedule III at 18% in the amended historical schedule.

Practical compliance points

• Verify the correct HSN and product description before selecting the GST rate.
• Use the rate legally in force on the relevant date, including any subsequent amendments.
• Distinguish intra-state CGST and SGST from inter-state IGST.
• Check applicable time-of-supply rules, particularly where an invoice, payment or supply spans a rate-change date.
• Confirm input tax credit eligibility separately under the CGST Act and relevant rules.

Official sources

• 25th GST Council meeting - detailed agenda and fitment recommendation
• GST Council meeting records and minutes
• CBIC GST goods and services rate schedule
• CBIC Central Tax (Rate) notifications
• CBIC Integrated Tax (Rate) notifications

This article is for general legal and tax information. For a current transaction, consult the operative notification and amendments.