Current Affairs A-Z
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About GST Compensation Cess
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Feature |
Health Security se National Security Cess |
Central Excise (Amendment) Bill |
GST Compensation Cess |
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Nature of Levy |
New cess on specified sin goods | Permanent central excise duty on tobacco | Additional cess under the GST Act, 2017 |
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Purpose |
Mobilise funds for health + national security | Maintain a high tax burden on tobacco after the cess ends | Compensate states for GST revenue loss |
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Tax Base |
Production capacity of machines | Specific excise duty on tobacco items | Applied on the consumption of luxury/demerit goods |
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Covered Goods |
Initially pan masala, expandable to others | Cigarettes, cigars, cheroots, chewing/ hookah/ scented tobacco, zarda | Luxury cars, aerated drinks, tobacco, coal |
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Revenue Destination |
Consolidated Fund of India (no state share) | Consolidated Fund of India | Compensation Fund for states |
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Timeframe |
New, permanent policy measure | Permanent duty structure | July 2017-June 2022; extended to March 2026 |
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State Involvement |
No revenue sharing | No GST Council approval needed for rate changes | Directly compensates states for revenue loss |
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Policy Goal |
Maintain tax neutrality + fund health/security | Preserve tobacco tax levels post-GST cess | Guarantee 14% annual revenue growth to states |
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