GST Council Forms GoM to Decide Taxation on Luxury Goods Post-Cess

The GST Council has constituted a 10-member Group of Ministers (GoM) led by Minister of State for Finance Pankaj Chaudhary to explore taxation strategies for luxury, sin, and demerit goods. The GoM will report by December 31 and focus on alternatives as the compensation cess ends in March 2026.

The recently-formed Group of Ministers (GoM) under the GST Council, chaired by Minister of State for Finance Pankaj Chaudhary, has been tasked with exploring taxation options for luxury, sin, and demerit goods after the end of the compensation cess in March 2026.

Representatives from ten states, including Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal, will submit their recommendations to the GST Council by December 31. The GoM's critical mandate includes determining whether to continue the levy as a cess or impose additional taxes.

The important consideration revolves around the use of compensation cess funds to repay the Rs 2.69 lakh crore loan taken during the Covid period. The Group's decision date aligns with the anticipated cessation of the levy, leaving minimal time to propose a new tax regime.

(With inputs from agencies.)