What is GST Compensation Cess? Which all goods are covered under compensation cess?
Question
GST Compensation Cess is the cess collected on the supply of selected goods, services or both as mentioned in the GST Act 2017. The GST Compensation Cess will compensate the states for any revenue loss incurred on implementing Goods & Service Tax (GST) on July 1, 2017 for a period of 5 years or as the GST council recommends.
Answer ( 1 )
GST Compensation Cess is levied by the Goods and Services Tax (Compensation to States) Act 2017. The object of levying this cess is to compensate the states for the loss of revenue arising due to the implementation of GST on 1st July 2017 for a period of five years or such period as recommended by the GST Council. GST, being a consumption-based tax, would result in loss of revenue for manufacturing-heavy states.