GST Compensation Cess Deadline Extended till March 2026
The Central Government has extended the deadline for GST Compensation Cess till March 2026. The collection of GST Cess was to be abolished on 30th June, but the government has made payment of dues and loans of compensation given to the states in the last two years in view of the shortfall in revenue collection and in the second financial year.
For Loans and Dues, it was decided to extend it further for 4 years. According to the news going on in the media, this information has been issued by the Union Finance Ministry. It is worth noting that GST Compensation Cess is levied on expensive items and non-essential goods. Now, this cess will be charged by March 2026. The purpose of the government behind levying this cess is to compensate for the loss in revenue.
The central government had released Rs 1.1 lakh crore by raising borrowings in the financial year 2020-21 to compensate for the fall in cess collection. In the financial year 2021-22, an amount of Rs 1.59 crore was released to the states by borrowing the same item. In such a situation, many states had asked the central government to continue with the Compensation Cess system, because the closure of the compensation system would lead to a shortage in their revenue.