GST compensation: Government notifies GST compensation cess extension to March 2026

The government has notified the goods and services tax (GST) compensation cess extension to March 2026. Through a gazette notification, the finance ministry confirmed the period of extension up to March 2026. The extension will also help in paying compensation to states due for the month of May and June 2022.

Extension is notified as per the repayment schedule agreed upon in September 2021 GST Council meeting. The extension is facilitated to repay the borrowing made in the past to pay the promised compensation to states.

GST Compensation Cess is levied by the Goods and Services Tax (Compensation to States) Act 2017. The object of levying this cess is to compensate the states for the loss of revenue arising due to the implementation of GST on 1st July 2017 for a period of five years or such period as recommended by the GST Council.