MoS Finance Likely to Lead GoM on GST Compensation Cess

By: Admin
September 16, 2024
Categories: GST Recent News
4 Min Read

The Group of Ministers (GoM), responsible for revising the GST compensation cess framework, will likely be led by Union Minister of State for Finance Pankaj Chaudhary, according to an official source. The GoM includes state representatives, and its Terms of Reference (ToR) are currently being finalized.

Key Responsibilities of the GoM:

The GoM will outline how the GST compensation cess, collected on demerit and luxury goods, will be shared between the Centre and states. Moreover, the group will propose the legal amendments required to implement these changes.

The GST Council, after extensive discussions, decided to form this panel to address the future of the GST compensation cess. This cess has been crucial in compensating states for revenue shortfalls following the implementation of GST in 2017. Furthermore, it played a significant role in covering revenue gaps during the COVID-19 pandemic.

Cess Collection and Loan Repayment:

To manage the fiscal shortfall during the pandemic, the Centre borrowed Rs 2.69 lakh crore. It plans to repay this loan, including interest, by January 2026, four months ahead of schedule. Once the repayment is complete, the GoM will decide the future of the cess and recommend how to allocate the funds between the Centre and states.

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