Govt notifies GST compensation cess extension until March 2026

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The government has notified the goods and services tax (GST) compensation cess extension to March 2026. Through a gazette notification on June 25, the finance ministry confirmed the period of extension.

The imposition of GST compensation cess on certain goods and services had already been extended until March 2026 to make up for the borrowings and arrears of compensation paid to states in the last two financial years.

Also Read: Extend GST compensation period for another 3 years: Congress to Centre

To get the states on board prior-to the nationwide roll-out of the consumption-based tax that subsumed most state-level levies, the Centre had assured an annual GST revenue growth of 14 per cent for a period of five years to June 30, 2022 with any shortfall being met from the compensation cess fund.

Now, the extension of the cess will help repay the special borrowings over the last two financial year. The states will not be paid the so-called GST compensation from July 1 this year. Some states have demanded an extension but the Centre is not in favour.

The GST Council will meet in Chandigarh next week.