GST Compensation Cess: Minister of State for Finance Pankaj Chaudhary may be the convener of the Group of Ministers (GoM) working on GST compensation cess. It will also include members from the states. An official gave this information. The official further said that the work of finalizing the Terms of Reference (TOR) and the members of the GoM is underway.

The official said, "The GoM will have to suggest how the cess collected on harmful and luxury goods will be divided between the Center and the states. Also, the GoM will suggest the legal amendments required to implement this change. "The official said that the process of deciding on the members of the group of ministers on GST compensation cess is underway. But, since the issue is related to the cess, which is collected by the Center, and it will be divided, the GoM will also have a member from the Center.

The official said, "Usually the most senior member of the GoM is made its convener. Therefore, the Union Minister of State for Finance is likely to be the convener of the GoM on GST compensation cess." The GST Council in its meeting last week decided to form a group of ministers which will suggest to the council how to proceed on GST compensation cess. It is levied on luxury and harmful products to pay off the loan taken to compensate for the shortfall in revenue during the years of the Kovid epidemic.

The government had borrowed Rs 2.69 lakh crore in the financial years 2020-21 and 2021-22 to meet the revenue deficit of the states. The GST Council had decided to extend the compensation cess to repay the loan and interest till March 2026. Finance Minister Nirmala Sitharaman had said last week that the payment of loan and interest is expected to be completed by December 2025 or January 2026.

The compensation cess was initially introduced for five years to compensate for the revenue loss suffered by the states. It expired in June 2022, but the amount raised from it was used by the Center to pay Rs 2.69 lakh crore of loans and interest taken during Kovid-19. In June 2022, the Center extended the compensation cess till March 2026. The Goods and Services Tax (GST) was implemented on July 1, 2017.