GST Panel discusses to merge GST Compensation Cess into GST Slab

The group of ministers (GoM) on GST compensation cess, led by Minister of State for Finance Pankaj Chaudhary, met on Wednesday to discuss the merging of the cess into GST. States proposed that during the cess transition, once it has been determined to combine with taxes, no new goods be added to the list of luxury, sin, and demerit goods.

States were of the opinion that because the compensation cess expires in March 2026, the only way to restructure it is to combine the levy with the taxes and establish different tax rates for the items on which the cess is currently imposed.

“The GST compensation cess is coming to an end. There needed to be a discussion on the cess’s future. Every state has expressed its opinions. This was our first meeting,” Chaudhary stated.

Should it continue as a cess or be converted to a tax and whether there will be changes in luxury, demerit, and sin goods items? Chaudhary stated, “Discussion is going on.” The next meeting of the GoM on compensation cess will take place in the second week of November.

The GoM, which includes members from Assam, Chhattisgarh, Gujarat, Karnataka, MP, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal, will submit its findings to the GST Council by December 31.