 "Centre anticipates Rs 70k crore GST cess surplus from 'sin' goods")
The Centre is expecting a substantial surplus of around Rs 70,000 crore from GST compensation cess collections, even after settling loans taken out on behalf of states during the pandemic, the Economic Times reported on Saturday.
The surprise surplus is attributed to impressive revenue generation from taxes on the so-called “sin” goods like pan masala, cigarettes, and vehicles, which attract 28 per cent GST with an additional cess.
The report cited officials to state that this surplus could help the Centre repay the loans and still be left with a substantial amount for other uses. This amount is based on the revenue estimation ahead of the full Budget to be presented next month.
To be clear, the Centre has not yet taken a call on the use of this surplus cess, and the topic is expected to be discussed in today’s GST Council meeting chaired by Finance Minister Nirmala Sitharaman.
The compensation cess was initially brought in for 5 years to make up for the revenue loss of states after the implementation of GST. This compensation cess expired in June 2022 but was further extended till March 2026 to repay the Centre’s loan amount of Rs 2.69 trillion, which it borrowed to meet the cess deficit.
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