GoM Meeting on GST Compensation Cess
Introduction
A ten-member Group of Ministers (GoM) panel, led by Union Minister of State for Finance Pankaj Chaudhary, convened in New Delhi to discuss the ongoing issue of compensation cess under the GST regime. The meeting aimed to address the future of this cess, but no final decision was reached.
Meeting Details
The meeting was called to deliberate on whether the duration of the compensation cess should be extended or reduced. Since it was the first meeting, no decision was made. A follow-up meeting is scheduled for the second week of November in Delhi.
Background
The discussion was initiated by the states and was a result of the 54th GST Council meeting. The GoM was tasked with exploring whether the compensation cess should continue after repaying loans taken to support states or be integrated into the highest tax bracket.
Panel Members
Besides Pankaj Chaudhary, the panel includes Harpal Singh Cheema (Punjab), Om Prakash Choudhary (Chhattisgarh), Chandrima Bhattacharya (West Bengal), Ajanta Neog (Assam), Kanubhai Desai (Gujarat), Krishna Byre Gowda (Karnataka), Jagdish Devda (Madhya Pradesh), Thangam Thennarasu (Tamil Nadu), and Suresh Khanna (Uttar Pradesh).
Financial Implications
The government plans to continue GST compensation cess collections beyond FY25 to meet a commitment of Rs 1.37 lakh crore for FY25. The total compensation cess collections until March 2025 are estimated at Rs 8.60 lakh crore, with Rs 6.64 lakh crore already paid to states by August 2024. Loans taken to support states amount to Rs 2.69 lakh crore, with interest at Rs 51,000 crore.
Doubts Revealed
Pankaj Chaudhary -: Pankaj Chaudhary is an Indian politician who is currently serving as a Minister of State for Finance in the Government of India. He plays a key role in financial matters, including discussions on GST.
GoM -: GoM stands for Group of Ministers. It is a group formed by the government to discuss and make decisions on specific issues, like the GST compensation cess in this case.
GST Compensation Cess -: GST Compensation Cess is an extra tax collected on certain goods to compensate states for any loss of revenue due to the implementation of GST (Goods and Services Tax). It helps ensure that states have enough money to run their programs.
Cess Duration -: Cess duration refers to the period for which the GST compensation cess will be collected. The government is deciding whether to extend this period or reduce it.
FY25 -: FY25 stands for the financial year 2025. In India, a financial year starts on April 1st and ends on March 31st of the next year. FY25 would be from April 1, 2024, to March 31, 2025.