NEW DELHI: The Group of Ministers (GoM) on GST compensation cess, led by Minister of State for Finance Pankaj Chaudhary, on Wednesday held discussions regarding potential merger of compensation cess into the goods and services tax (GST). There was no decision yet, as confirmed by Chaudhary. Talking to reporters after the meeting, he said GoM would meet again in the second week of November.
“GST compensation cess is coming to an end. A discussion needed to be done on what will be the future of cess. Every state has given their views. This was the first meeting,” he added. As per sources, during the meeting of the panel, states referred back to discussions from the 7th GST Council meeting held in December 2016. At that time, former finance minister Arun Jaitley indicated that compensation cess could be merged into the GST once initial 5-year period of levy concluded.
Prior to introduction of the GST in 2017, central and state governments agreed to impose a cess on certain luxury, sin, and demerit goods, in addition to 28% tax rate. This cess was intended to generate revenue to compensate states for revenue losses incurred following the GST implementation.