What is GST Compensation Cess?
GST Compensation Cess is the cess collected on the supply of selected goods, services or both as mentioned in the GST Act 2017. What is GST cess for? The GST Compensation Cess will compensate the states for any revenue loss incurred on implementing Goods & Service Tax (GST) on July 1, 2017 for a period of 5 years or as the GST council recommends. This cess in GST arises due to the nature of GST as a consumption-based tax as certain states will be more into manufacturing than consumption.
Who should Collect Compensation Cess in GST?
Compensation cess in GST are collected by taxpayers who are engaged in the supply of goods, services or both who does not fall under exporters and composition taxpayers. This GST cess is applicable to certain goods imported to India as well. Exporters who have paid the compensation cess on exports will be eligible to get a refund.
