Ministers’ Panel on Compensation Cess Holds First Meeting, Considers Recategorising Luxury Goods Under 28% GST Bracket

By: Admin
October 15, 2024
Categories: GST Recent News
4 Min Read

The Group of Ministers (GoM) held its first meeting earlier this month to discuss the future of the GST compensation cess regime, which is set to end in March 2026. Key topics included the possibility of extending the cess as a levy or subsuming it into a higher tax bracket.

One major consideration was the potential recategorisation of luxury goods under the 28% GST bracket. Currently, high-end white goods such as air conditioners, commercial refrigerators, and dishwashers fall under this category, but the panel is exploring the option of shifting these items to standard GST rates.

The compensation cess collections, which have been used to repay ₹2.69 lakh crore in COVID-19 loans, are expected to be cleared by January 2026. The panel also anticipates collecting an additional ₹40,000 crore in compensation cess by February-March 2026.

The GoM has been tasked with deciding on the equal sharing of the cess between the Centre and states. The meeting was chaired by Minister of State for Finance, Pankaj Chaudhary, following the creation of the 10-member GoM by the GST Council in September 2024. The panel will make recommendations on the taxation of luxury, sin, and demerit goods after the compensation cess ends in 2026.

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