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Introduction During a lively Question Hour session in Parliament, Tamil Nadu MP D. Ravikumar raised a critical issue regarding the continuation of the GST compensation cess, even though direct payments to states have ceased. Finance Minister Nirmala Sitharaman addressed these concerns, providing important clarifications about the purpose and necessity of the ongoing cess. Key Points Concerns Raised: MP D. Ravikumar highlighted the anomaly of the continued GST compensation cess despit
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FAQ :
The GST compensation cess has been extended until March 2026 to repay loans taken by the central government during the COVID-19 pandemic to compensate states for GST revenue shortfalls.
The GST compensation cess was initially set to end in June 2022.
The extension of the GST compensation cess was a collective decision made by the GST Council, which includes representatives from the central and state governments.
The cess was introduced in July 2017 to compensate states for revenue losses following the implementation of GST, aiming to ensure their revenues grew by 14% annually.
Yes, during the COVID-19 pandemic, the central government borrowed funds to continue compensating states for their GST revenue shortfalls.
The GST compensation cess is now extended until March 2026.
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