GST Compensation Cess term has been extended to March 31, 2026
GST Compensation Cess has been extended by the Central Govt for an additional four years, till June 2026. The period for levying and collecting the cess under section 8(1) of the Goods and Services Tax (Compensation to States) Act, 2017, "shall be up to the March, 2026," according to the notification released on Friday. Finance Minister, Smt Mrs Nirmala Sitharam, made a suggestion in June 2022 regarding extending the payout to the States by a further 5 Years.
The Period of Levy and Collection of GST Compensation Cess has been extended by the Ministry of Finance through Notification No. 1/2022 - Compensation Cess dated 24th June 2022, to 31st March 2026. Details CBIC Notification on GST Compensation Cess : Notification No. 1/2022
Centre & State Govt are stuck with reagrds to repayments of possible current market loan of Rs 2.69 lakh Cr by the end of FY. & from resaonable sources update this repayments can stretch well over 3 years after July 2022.
The Centre has lent the States Rs 75,000 crore this fiscal year from its own market loans, out of the expected Rs 1.59 lakh crore in GST Compensation shortfall this year. While market borrowing totaled Rs. 1.10 lakh crore in FY21 and compensation arrears of Rs. 81,000 crore remain unpaid, the overall bill comes to Rs. 3.5 lakh crore.
According to sources, the Centre may also test with the idea of a GST compensation that is zero-rated. In accordance with this, the Center would defend the State's FY22 revenue. Consequently, to the extent that any state's tax collection after July 2022 falls short of the level of the FY22, the Centre will guarantee compensation.
This recommendation from the Center may be used to persuade the States to modify rates and correct duties.