Cess: Punjab tax compensation for revenue losses, and seeks clarity from Gom

The Cess CESS case and the need to compensate the states for revenue losses under commodity and services tax (GST) on Wednesday during the CESS group meeting on CESS in the Commodity and Services Tax Board. Punjab Finance Minister Harbal Singhtima, a member of GOM for CESS, said that the loan payments that are taken through Covid through groups of CESS are scheduled to end in October. He also pointed out that although Gom is expected to reach an alternative mechanism to prevent any revenue losses in countries, it did not do so. He said that Punjab is facing a loss of revenue of about 21,000 rupees annually since the execution of the commodity and services tax.

According to the Ministry of Finance’s proposal to GOM, CESS CESS will be replaced by 40 % of the specified sin goods, including tobacco, Masala, online games, and large cars. They indicated that the rate will only apply to five to seven elements.

CESS CESS is expected to end by March 2026, while the loan is likely to be completed by January 2026. Gom will examine what is happening to CESS after sunset date.

Several states in the past also raised concerns about the losses of possible revenue due to the rationalization of prices under the commodity and services tax indicated that they prefer to continue to stop compensation.

CESS was provided alongside GST to compensate the states for potential revenue losses, based on 14 % annual growth in revenue for the first five years. It was scheduled to end on June 30, 2022, but it was extended until March 2026, when the states had to borrow during the Covid-19s, where it could not be compensated for revenue losses. CESS is scheduled to end by March 2026. GOM was created to study what is happening for CESS after sunset date.