Centre Notifies Extension Of GST Compensation Cess to March 2026

The centre has informed about the extension of goods and services tax (GST) compensation cess to March 2026. The finance ministry has confirmed the extension period until March 2026 via a gazette notification. In accordance with the Goods and Services Tax (Period of Levy and Collection of Cess) Rules, 2022, provided by the finance ministry, the compensation cess will continue to be levied from July 1, 2022 to March 31, 2026.

Centre Notifies Extension Of GST Compensation Cess to March 2026

The announced extension shall facilitate in releasing the compensation to states that becomes due for May and June 2022.

The levy of GST compensation cess was to end on June 30, nevertheless the GST Council headed by the Finance Minister and including state finance ministers took a decision to extend it to March 2026 in order to repay the loans secured in the last 2 financial years to compensate for the deficit in their revenue stream.

The notified extension is in line with the repayment schedule agreed to in the GST Council Meet held in September 2021.

Importantly, GST Compensation cess is charged under the Goods and Services Tax (Compensation to States) Act 2017. This cess is charged with the objective of compensating the states for the revenue loss due to GST implementation beginning July 1, 2017 for a 5 year period or the period as suggested by the GST Council.

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