The Goods and Services Tax (GST) Council has constituted a 10-member Group of Ministers (GoM) panel, to decide on the taxation of luxury, sin and demerit goods once the compensation cess ends in March 2026. The panel will be chaired by Minister of State for Finance Pankaj Chaudhary.
The Group of Ministers (GoM) includes members from Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh, Assam, Chhattisgarh, Gujarat, Karnataka and West Bengal. It will submit its report to the Council by December 31.
Under the GST regime, a compensation cess is imposed on luxury, sin, and demerit goods in addition to the 28% GST rate. The revenue from this cess, initially intended to last for five years after the GST’s introduction (until June 2022), was meant to compensate states for revenue losses following the rollout of GST.
However, in 2022, the GST Council extended the levy until March 2026 to repay the Rs 2.69 trillion loan taken during the 2021 and 2022 fiscal years to cover states’ revenue losses during the COVID-19 pandemic. With about a year and a half remaining before the cess ends, the GST Council, in its 54th meeting on September 9, established a Group of Ministers (GoM) to determine the cess’s future.
