Quick Summary
The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 02/2025 - Compensation Cess (Rate), significantly reducing compensation cess rates on multiple goods to Nil. The changes will take effect from September 22, 2025, as per the Ministry of Finance's official notification.
Key Highlights of Notification 02/2025:
Goods Covered Under Nil Compensation Cess
- The notification substitutes the compensation cess rate with Nil for a wide range of items listed in the schedule, including serial numbers 2, 3, 4, 4A, 4B, 39, 40, 41, 42, 47, 48, 50, 51, 52, 52A, 52B, 53, 54, and 55.
- This move effectively eliminates compensation cess on these categories of goods.
Legal Basis
- Issued under Section 8(2) of the Goods and Services Tax (Compensation to States) Act, 2017, the notification follows the recommendations of the GST Council.
Effective Date
- The revised cess rates will come into force from September 22, 2025.
Background
- The principal notification 1/2017-Compensation Cess (Rate), issued on June 28, 2017, formed the foundation of cess applicability.
- It was last amended through Notification 3/2023-Compensation Cess (Rate) dated July 26, 2023.
Industry Impact
This move is expected to provide relief to businesses and consumers by reducing the tax burden on goods that previously attracted compensation cess. It also indicates the government's effort to streamline GST compliance and rationalize indirect taxation.
Official copy of the notification has been attached
FAQ :
The GST compensation cess will be reduced to nil on select goods from September 22, 2025.
The compensation cess will be reduced to nil for a wide range of items listed under serial numbers 2, 3, 4, 4A, 4B, 39, 40, 41, 42, 47, 48, 50, 51, 52, 52A, 52B, 53, 54, and 55.
This change is issued under Section 8(2) of the Goods and Services Tax (Compensation to States) Act, 2017, following recommendations from the GST Council.
This reduction is expected to provide relief to businesses and consumers by lowering the tax burden on affected goods and streamline GST compliance.
The notification was issued by the Central Board of Indirect Taxes and Customs (CBIC).
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