The Central Government has approved the imposition of GST Compensation Cess by 31 March 2026.
The Central Government has approved the imposition of GST Compensation Cess by 31 March 2026. Earlier its term was to end by this month i.e. 30 June, but under the leadership of Union Finance Minister Nirmala Sitharaman, the GST Council decided to extend it by four years. The finance ministers of the states also reside in this council. GST Compensation Cess under the Goods and Services Tax (Period of Levy and Collection of Cess) Rules, 2022 will continue from July 1, 2022 to March 31, 2026.
Why did the government extend the term?
The GST Council has extended the period for collection of GST Council Cess so that states do not face any problem in repaying their loans due to fall in revenue. This decision was taken so that the states did not face any problem in repaying the loans taken during the last two financial years 2020-21 and financial year 2021-22. Earlier, in the 45th GST Council meeting last year, the Union Finance Minister had said that due to the implementation of GST, the compensation for the fall in revenue to the states will be given only till June 2022. However, the compensation cess will continue for another four years.
PMGKAY: The scheme giving free ration to the poor may be stopped? Finance Ministry objected to the scheme for this reason
Cess collection will continue on these items
GST was implemented on 1st July 2017. The States/Union Territories were assured that any fall in their revenue due to the implementation of GST would be paid by the Central Government for five years. In this calculation, it was assumed that the revenue of the states is growing at a compounded rate of 14 per cent, but the cess did not increase in the same proportion. Apart from this, the corona pandemic also widened the gap between revenue estimates and actual revenue and cess collection. The Center has paid the full compensation of GST to the states by 31 March 2022.
However, to repay the loans taken by the States/UTs during the two financial years, for which it will continue to levy cess on tobacco, cigarettes, hookah, aerated water, high-end motorcycles, aircraft, yachts and motor vehicles That means you will have to pay a higher price for them. Explain that after the implementation of GST, the states did not have the power to levy indirect taxes on goods and services at the local level, then there was a huge decline in the earnings of the states, for which the Center kept a provision of compensation and also a provision of cess on some items. kept.
(Input: PTI)
