False Accusation Exposed: Centre Did Not Use Compensation Cess for Its Own Debt

The Ministry of Finance has several times informed that Compensation Cess was collected for a duration of five years, only to give the amount to the states. After this duration of five years, it was supposed to end.

The officials of the finance ministry are strongly criticising the claim that the Centre is using the Compensation Cess to repay its own loans. This is not true.

The Compensation Cess is collected with the approval of the GST council for the purpose of repaying credits taken during the period of the COVID-19 pandemic by the government, which ultimately affected their revenue collection during the period.

The officials are shocked that the constitutional body, comprised of finance ministers of all states, would ever allow them to use the Compensation Cess to pay the central government’s own debts. Unless the Hon’ble MP Shri Sasikanth Senthil believes that all these finance ministers are unaware or unable to question me.

The MP should withdraw his incorrect and baseless accusation.

It has been clarified many times that the Compensation Cess was collected for a period of five years for the purpose of giving it to the states, and that after five years it was to conclude.

I must also express my serious objection to the observation that the Compensation Cess… pic.twitter.com/5yzrhJKG2T

— Nirmala Sitharaman Office (@nsitharamanoffc) December 3, 2025