GST Council forms 10-member panel: Will submit report on future of compensation cess by December 31
The Group of Ministers (GoM), comprising members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal, will submit its report to the Council by December 31.
The GST Council Secretariat said in an office memorandum that the terms of reference of the GoM are to make tax proposals to replace the compensation cess after its abolition.
In the GST regime, compensation cess is levied on luxury, sin and demerit items in addition to the 28% tax. The revenue from the cess, which was originally planned for five years after the GST rollout or till June 2022, was used to compensate states for the loss of GST revenue.
The government has earmarked a sum of Rs 100,000 to cover the revenue deficit of states in fiscal years 2021 and 2022. With Rs 2.69 lakh crore borrowed, the GST Council decided to extend the recovery cess levy for loan and interest repayments till March 2026.
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