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Published on:
March 21, 2023
By
Harshini

States requested for extension of payment of GST compensation Cess

Yes, several states in India have requested for an extension of payment of GST compensation cess. The GST compensation cess is levied on certain goods and services to compensate states for any loss of revenue due to the implementation of GST.

The states have requested an extension of payment of the GST compensation cess beyond the current deadline of June 2022. They have cited the impact of the COVID-19 pandemic on their finances as the reason for the request. The pandemic has led to a decline in revenue collections for the states, which has made it difficult for them to meet their obligations.

The GST Council, which is responsible for deciding on issues related to GST, has discussed the matter and is considering the request from the states. The Council has stated that it is committed to providing support to the states during these challenging times and will work towards finding a solution to the issue.

It is worth noting that the GST compensation cess is an important source of revenue for the states, and any delay or extension in payment can have a significant impact on their finances. Therefore, it is important for the Council to carefully consider the request from the states and work towards finding a solution that is fair and equitable for all stakeholders.

"Revenue Protection Provision" under the GST (Compensation to States) Act, 2017.

Under this provision, if a state's revenue from GST falls below the protected revenue for that state, as calculated by the central government, the state is entitled to receive compensation from the Centre for any shortfall in revenue for a period of five years after the implementation of GST.

The compensation is funded by the GST compensation cess that is levied on certain goods and services. The revenue from this cess is collected by the Centre and then distributed to the states.

Due to the impact of the COVID-19 pandemic on state finances, several states in India have requested an extension of payment of the GST compensation cess beyond the current deadline of June 2022. They have cited the challenges faced by them in meeting their revenue obligations and have requested additional financial support.

The GST Council, which is responsible for deciding on issues related to GST, has discussed the matter and is considering the request from the states. It is important for the Council to carefully consider the impact of any decision on the finances of both the states and the Centre, and work towards finding a solution that is fair and equitable for all stakeholders.


the provision of the Constitution (101st Amendment) Act, 2016 which established the Goods and Services Tax (GST) Council and provides for compensation to states for loss of revenue due to the implementation of GST.

Under this provision, the central government is required to compensate states for any revenue loss due to the implementation of GST for a period of five years from the date of introduction of GST. This compensation is funded by a GST compensation cess levied on certain goods and services.

The states have requested an extension of payment of the GST compensation cess beyond the current deadline of June 2022 due to the impact of the COVID-19 pandemic on their finances. The GST Council, which is responsible for deciding on issues related to GST, is considering the request from the states and is committed to providing support to the states during these challenging times.

It is worth noting that the protection of revenue provision is an important aspect of the GST regime, as it ensures that no state faces any revenue loss due to the implementation of GST. Any delay or extension in payment of the compensation cess can have a significant impact on the finances of the states, and it is important for the Council to carefully consider the request from the states and work towards finding a solution that is fair and equitable for all stakeholders.

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