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On 18th February 2017, the GST Council in its 10th meeting approved the “GST Compensation to the state to provide compensation to the States for loss of revenue due to implementation of GSTin India”. GST Cess is levied on intra-state supply of goods or services and inter-state supply of goods or services. GST Cess is a compensation Cess levied under Section 8 of The Goods and Services Tax (Compensation to State) Act, 2017. As GST Cess is a tax based on consumption, thus the state in which the consumption of goods and supply happen would be eligible.
After GST came
into effect, Few States become the net exporter of the goods and services and
are experiencing a decrease in the indirect tax revenue. However, the Central
government with a view to compensate the States for the loss in the tax revenue
has declared the Goods and Service Tax Compensation Cess which would be levied
for a period of 5 years from the GST implementation.
The GST Cess of The Goods and Services Tax (Compensation to State) Act, 2017 provides the manner of ascertaining the amount of compensation payable to the state during the transition period of 5 years by the Central Government on account of revenue loss attributable to levy goods and services tax.
related to the collection, payment return, refund, etc. have been provided in
the Compensation Act. Every taxable person making a taxable supply of goods and
services shall pay the amount of Cess under this Act in such a manner as
provided and will apply for the refunds of such Cess paid in such form as
All Inclusive Price – Rs 1,499/-
of GST Cess is on the variety of goods and services that are traded whether
intrastate or interstate by the GST registered businesses provided it should
not fall under the Composition scheme, for the following categories along with
Cess rate list-
The Central government on the recommendation of the Council, by notification in the official Gazette makes rules for carrying out the provisions of this Act. While the Input Tax Credit that comes from the Compensation Cess on the supply of goods or services can only be utilized towards the payment of the Compensation Cess on the supply of goods or services.
Government has designed the GST Law in such a way where the Compensation Cess
lasts for 5 years i.e. the Cess set to an end in July 2022. The 5-year duration
gives states the time to adjust and transition to the regime. However, the
government may change it based on the recommendation of the GST council. As the
Cess has gone through several changes.
Also, Read: Impact of GST on Cars And Other Automobiles in India.
Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.
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