Cess Calculation

  • GST Compensation Cess is leviable on both interstate and intrastate supply of goods. It is also applicable on imports and goods transactions which are subject to reverse charge.
  • It is applicable only on notified goods. These goods as on date are pan masala, tobbaco and tobacco products, coal, aerated waters, motor cars & motor vehicles and any other supplies.
  • GST Compensation Cess is calculated on taxable value. Though it is coined as Cess, it is similar to tax. It is independent of IGST, CGST and SGST.
  • Input Tax Credit availed on GST Compensation Cess can be utilized only towards discharging Output tax liability of Compensation Cess and not otherwise.

Calculation types of Cess

There are five different calculation types for cess calculation

  • Cess %
  • Threshold
  • Cess % + Amount / Unit Factor
  • Cess % Or Amount / Unit Factor Whichever Higher
  • Amount / Unit Factor

Method of calculation for type Cess%

If the Cess is applicable for any commodity, based on the GST group code then system will pick the Cess% defined on it.

In this scenario, invoice has been issued for INR 800 on which 18% IGST (9% CGST and 9% SGST/UTGST in case of Intra-State or Intra-Union Territory transaction or 18% IGST in case of Inter-State transaction), 10% Cess has to be charged.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 400
    GST Base Amount 800
    CGST 72 (800*9/100)
    SGST 72 (800*9/100)
    IGST 144 (800*18/100)
    CESS 80 (800*10/100)

Method of calculation for type Threshold

For Threshold calculation type user will define Threshold Amount, Before Threshold % and Cess % (considered after crossing threshold amount). Note that Threshold amount defined in GST CESS setup for a particular GST Group Code will be applicable line wise.

Suppose, Before Threshold % is 2% and Threshold Amount is INR 1,000. An invoice has been issued for INR 800. In this scenario as the amount is less than the threshold amount, 2% Cess has to be charged.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 400
    GST Base Amount 800
    CGST 72 (800*9/100)
    SGST 72 (800*9/100)
    IGST 144 (800*18/100)
    CESS 16 (800*2/100)

Suppose, Cess % is 10% and Threshold Amount is INR 1,000. An invoice has been issued for INR 10000. In this scenario as the amount is greater than the threshold amount, 10% Cess has to be charged.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 5000
    GST Base Amount 10000
    CGST 900 (10000*9/100)
    SGST 900 (10000*9/100)
    IGST 1800 (10000*18/100)
    CESS 1000 (10000*10/100)

Method of calculation for type Cess% + Amount per Unit Factor

For component calculation type - ‘Cess % + Amount/Unit Factor’, system will consider ‘Cess %’ along with ‘Amount/Unit Factor’ defined on GST Setup fields i.e. Cess UOM (Unit of Measure), Cess Amount Per Unit Factor and Cess Factor Quantity.

Suppose, Cess % is 10%, Cess Amount per Unit Factor is INR 130 and Cess Factor Quantity is 1. An invoice has been issued for INR 10000. In this scenario 10% Cess and INR 260 has to be charged.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 5000
    GST Base Amount 10000
    CGST 900 (10000*9/100)
    SGST 900 (10000*9/100)
    IGST 1800 (10000*18/100)
    CESS 1260 [{1000=(10000*10/100)}+{260=(130x2)}]

Method of calculation for type Cess% Or Amount/Unit Factor Whichever Higher

For component calculation type - ‘Cess or Amount/Unit Factor whichever is higher’ system will consider ‘Cess %’ or ‘Amount/Unit Factor’ whichever is higher based on values defined on GST Setup fields i.e. Cess UOM (Unit of Measure), Cess Amount Per Unit Factor and Cess Factor Quantity.

Suppose, Cess % is 10%, Cess Amount per Unit Factor is INR 130 and Cess Factor Quantity is 1. An invoice has been issued for INR 10000. In this case cess amount will be INR 1000 which is higher than the quantity multiplied by the Cess Amount per Unit Factor, hence system will consider INR 1000 as Cess Amount.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 5000
    GST Base Amount 10000
    CGST 900 (10000*9/100)
    SGST 900 (10000*9/100)
    IGST 1800 (10000*18/100)
    CESS 1000 [{1000=(10000*10/100)} > {260=(130x2)}]

Suppose, Cess % is 5%, Cess Amount per Unit Factor is INR 1000 and Cess Factor Quantity is 1. An invoice has been issued for INR 10000. In this case the quantity multiplied by the Cess Amount per Unit Factor is INR 2000 which is higher than the rate defined in Cess%, hence system will consider INR 2000 as Cess Amount.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 5000
    GST Base Amount 10000
    CGST 900 (10000*9/100)
    SGST 900 (10000*9/100)
    IGST 1800 (10000*18/100)
    CESS 2000 [{2000=(1000x2)} > {500=(10000*5/100)}]

Method of calculation for type Amount/Unit Factor

For component calculation type as ‘Amount/Unit Factor’ system will consider Cess value based on values defined GST Group Code in fields Cess UOM, Cess Amount Per Unit Factor and Cess Factor Quantity.

Suppose, Cess Amount per Unit Factor is INR 140 and Cess Factor Quantity is 1. An invoice has been issued for INR 10000. In this scenario INR 280 has to be charged.

  • GST calculation will appear in the Fact Box, as following:

    Component Amount
    Quantity 2
    Unit Amount 5000
    GST Base Amount 10000
    CGST 900 (10000*9/100)
    SGST 900 (10000*9/100)
    IGST 1800 (10000*18/100)
    CESS 280 (140x2)

See Also

GST Cess Basic Setup

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