GST Council will discuss compensation cess after March, 2026, issue was raised in GST Council meeting

Prater, New Delhi: The GST Council will discuss the sharing of revenue collected by imposing compensation cess on luxury goods after March 2026. An official said that the deadline to repay the loan taken by the Center to compensate for the revenue loss suffered by the states during the Corona epidemic is March 2026.

GST The Compensation Cess was initially introduced for five years to meet the shortfall in the revenue of the states after the implementation of the Income Tax Act. The compensation cess ended in June, 2022, but the amount collected through it is being used to repay the principal and interest of Rs 2.69 lakh crore that the Center had borrowed during Corona.

GST can take decision on compensation cess

GST Council has now to decide on the issue of ‘GST Compensation Cess’ regarding its name and the modalities of its distribution among the states. Some states had raised this issue in the 52nd meeting of the GST Council held on October 7. Chhattisgarh Deputy Chief Minister TS Singh Deo said Karnataka raised the issue of tax collected under the GST Compensation Cess Account.

He said, ‘What will happen to the cess amount after March 2026? When there is no compensation, what will you do with the cess amount! Will there be a cess or will there be a cess by some other name? Will it be for some other purpose? How will you distribute it, will it be based on financial year 2015-16 or some new date? The consensus of the Council on this was that if you are going to talk about it, we should talk about a new financial year (base year).