GST Compensation Cess is the cess levied on certain notified goods in addition to IGST, CGST, and SGST. The purpose of levying Cess is to compensate states that incurred a loss in revenue due to implementation of GST Act.
- GST Compensation Cess would be levied for a period of five years (up to 01/07/2022) from date of implementation of GST i.e. 01/07/2017
- Taxable persons selling notified goods are liable to collect and pay GST Compensation Cess. CBEC has notified list of goods and services here
- It is calculated on transaction value of goods or services
- Input Tax Credit of cess can only be used for payment of cess liability on sales. It cannot be used for payment of output CGST, SGST or IGST
Read more: What is GST Compensation Cess?