New Delhi
A group of ministers (GoM) led by Minister of State for Finance, Pankaj Chaudhary, met on Wednesday to discuss the potential merger of the GST compensation cess into the Goods and Services Tax (GST). This meeting focused on the future of the cess, which is set to expire in March 2026.
States expressed that during the transition to a tax structure, no new items should be added to the categories of luxury, sin, and demerit goods currently subject to the cess. The ministers emphasized the need to restructure the cess into tax rates for these goods, given that the compensation period is coming to an end.
Chaudhary highlighted the importance of the discussion, stating, ‘Every state has given their views. This was the first meeting.’ He noted that deliberations would continue on whether the cess should remain or be converted into a tax, and whether there would be changes to the classifications of affected goods. The next meeting is scheduled for the second week of November.
The GoM includes representatives from various states, including Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal. They aim to submit their recommendations to the GST Council by December 31.
Originally, the compensation cess was introduced to compensate states for revenue losses following the GST rollout in 2017. It was extended in 2022 to help repay loans taken to offset revenue losses during the COVID-19 pandemic.
