GST compensation tax extended until March 2026

New Delhi:

For almost four years, until 31 March 2026, the government has extended the deadline for the collection of GST compensation tax.

Compensation tax will continue to be levied from July 1, 2022 to March 31, 2026 in accordance with the Goods and Tax (Collection Period and Collection Collection) Rules 2022 published by the Ministry of Finance.

On June 30, corporate taxation should end. However, the GST committee chaired by Federal Finance Minister Nirmala Sitharaman has opted to extend it until March 2026 to repay loans taken in the previous two financial years to make up the shortfall in their income collection.

After the 45th GST Council meeting in Lucknow last September, Sitharaman said a system to compensate for shortfalls in revenue resulting from the incorporation of levies, including VAT, into the single-country tax GST To be discontinued in June 2022.

Compensation tax on luxury goods and depreciable products will still be levied until March 2026 in order to repay 2020-21 and 2021-22 borrowings to cover lost GST revenue to the states.

The centre has borrowed and issued Rs 1.1 crore in 2020-21 and Rs 1.59 crore in 2021-22 as part of back-to-back loans to cover the cess collection gap that has created resource gaps in the states.

For borrowings in 2021-2022, the center has repaid Rs 75 billion in interest costs and still owes Rs 140 billion in the current financial year. Principal repayments will begin in 2023 and will continue until March 2026.

See also  Indian economy may take 12 years to overcome Covid losses: RBI

On July 1, 2017, the government implemented the Goods and Tax (GST) and guaranteed to be reimbursed for any lost revenue due to implementation within five years.

While state protected income has been growing at a 14% CAGR, the gap between forecast and actual income, including tax reductions, has widened further due to COVID-19.

As of May 31, 2022, the full GST compensation payable by the Centre to the has been provided.

According to the PTI report, according to Rajat Mohan, a senior partner at AMRG & Associates, the extension of the compensation tax will result in higher tax rates on goods such as tobacco, cigarettes, hookah, inflatable water, high-end motorcycles, aircraft, yachts, and automobiles.

Deloitte India partner MS Mani told PTI, “While to be expected, the extension of the compensatory will continue to put a burden on affected businesses, especially industries such as automotive, as it is one of the industries that needs to be encouraged. There’s a multiplier effect on GDP and employment.”

Abhishek Jain, partner in indirect tax at KPMG India, told PTI that “the question of whether will be compensated after 5 years may finally be decided at the upcoming GST committee meeting.”

Notice: ob_end_flush(): failed to send buffer of zlib output compression (1) in /home/advertis/domains/ on line 5275

Notice: ob_end_flush(): failed to send buffer of zlib output compression (1) in /home/advertis/domains/ on line 5275

Notice: ob_end_flush(): failed to send buffer of zlib output compression (1) in /home/advertis/domains/ on line 110