Ministers to Rework GST Compensation Cess

A Group of Ministers (GoM) led by Union Minister of State for Finance Pankaj Chaudhary will rework the nomenclature for the GST compensation cess. The group will review how the cess on luxury and demerit goods is divided between the Centre and states and suggest necessary legal changes.

A Group of Ministers (GoM) led by Union Minister of State for Finance Pankaj Chaudhary is poised to rework the nomenclature for the GST compensation cess, according to an official statement.

The official revealed that the Terms of Reference (ToR) and the group's members are currently being finalized. The GoM's role includes advising on the division of cess collected on luxury and demerit goods between the Centre and states and proposing the legal alterations required to implement these changes.

Additionally, the GST Council recently decided to establish this panel to provide recommendations on handling the GST compensation cess, introduced to offset state revenue loss post-GST implementation. The loans taken to cover revenue shortfalls during the pandemic are expected to be repaid by early 2026. The GoM will guide on the future of the levy and its division post-repayment.

(With inputs from agencies.)