Panel discusses merger of GST compensation cess into taxes

New Delhi, Oct 17, 2024

The group of ministers on GST compensation cess, led by minister Pankaj Chaudhary, deliberated on merging the cess into GST, suggesting current luxury, sin, and demerit goods remain unchanged. With the cess ending in March 2026, states propose merging it with taxes. Further discussions will continue in November, with a final report due by December 31.

The group of ministers (GoM) on GST compensation cess, under minister of state for finance Pankaj Chaudhary, on Wednesday discussed merger of compensation cess into GST. States suggested that during the transition of cess, once it is decided to merge with taxes no new goods should be added to the list of luxury, sin and demerit goods.

States were of the view that since the compensation cess ends in March 2026, the only way to restructure it is to merge the levy with the taxes and bring about separate tax rates for the items on which cess is levied currently.

"GST compensation cess is coming to an end. A discussion needed to be done on what will be the future of the cess. Every state has given their views. This was the first meeting," Chaudhary said.

Should it continue as cess or be converted to tax and whether there would be changes in luxury, demerit and sin goods items, Chaudhary said, "Discussion is going on". The next meeting of the GoM on compensation cess will be held in second week of November.

GoM, which includes members from Assam, Chhattisgarh, Gujarat, Karnataka, MP, Punjab, TN, UP and West Bengal, will submit its report to the GST Council by December 31.

[The Times of India]