2 Levies May Replace Compensation Cess

The GST Council, at its next meeting, may consider a proposal to replace existing compensation cess on sin goods and luxury items like coal, cigarettes and cars with two different levies—a health cess and a clean energy cess after 31 March 2026, people in the know said.

- Rajeev Jayaswal

There is a "near consensus" among officials and experts advising the Group of Ministers (GoM) deliberating the fate of compensation cess after the levy is abolished, they said requesting anonymity.

The majority of advisers want the cess on luxury items like cars to continue for funding clean energy initiatives. Similarly, they want that existing levies on sin goods such as tobacco products should continue to support health schemes, the people said.

"The GoM has almost finalized its recommendations on similar lines and the same is expected to be placed before the Council soon, which is the final authority," one of them said.