The Group of Ministers (GoM) on Compensation Cess is likely to seek six more months for finalising its report. Originally, it was asked to submit the report by December 31.
“We may need at least 6 more months to complete the discussion and prepare the report,” Minister of State in Finance, Pankaj Chaudhary, who is also the Chairman of the 10-member group, told reporters here on Friday. The group has met twice so far. It is likely to update about progress so far to the GST Council and accordingly, the Council will decide about extension.
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Its ‘Terms of Reference’ is to make taxation proposal to replace compensation cess after its abolition. Technically, all cess and surcharge (Centre and States) are part of GST. However, in order to compensate States for lower revenue growth post-GST introduction, a compensation cess through separate law was prescribed for the period of first five years i.e., till June 2022.
Later, to repay the back-to-back loan to meet the shortfall in GST compensation, the levy and collection of cess have been extended up to March 31, 2026. Government officials have indicated that cess is likely to continue albeit with a new nomenclature.
GST collection
Collections through compensation cess in the GST mechanism have recorded a growth of 6.5 per cent during April-November period. This is higher than the BE (Budget Estimate) growth rate of 4.1 per cent, but much lower than the growth rate of the last three full fiscal years, which was in double digits.
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The reworked Budget Estimate for FY24-25 sets a target of a little over ₹1.51 lakh crore to be collected through compensation cess. Data from the GST portal show that collections in the April-November period exceeded ₹1.01 lakh crore. This means around ₹50,000 crore needs to be collected in the remaining four months, requiring an average monthly collection of ₹12,500 crore. This is lower than the average monthly collection of ₹12,600 crore, indicating that there will not be any problem in achieving the BE.
Capital Expenditure
Earlier, while addressing a media briefing, Chaudhary said the Modi government has consistently increased its expenditure towards infrastructure building over the last 5 years. “The focus of the Modi government is on building infrastructure. India‘s road, air and rail connectivity has improved considerably over the last 10 years,” Chaudhary told reporters here.
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The government’s capital expenditure increased from over ₹5 lakh crore in 2021-22 to ₹11.11 lakh crore in 2024-25. He further said that keeping in mind the goal set by Prime Minister Narendra Modi to make India a developed nation by 2047, the government has been making budget allocations and will continue to do so in the upcoming Budget for 2025-26.
As per NITI Aayog’s ‘Vision for Viksit Bharat @ 2047’ document, India should strive to elevate itself to high-income status by its centenary of independence. India must aim to become a $30 trillion economy with a per capita income of $18,000 per annum by 2047.
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Published on December 13, 2024
https://www.thehindubusinessline.com/economy/gom-on-gst-compensation-cess-may-seek-6-more-months-to-submit-its-report/article68981184.ece
