GST Compensation Cess

GST Compensation Cess. Cess is a sub tax which is levied on the taxable amount of the person not his income. A cess is different from the usual taxes like excise duty and personal income tax . It is basically a tax on tax which is imposed as an additional tax besides the existing tax.

Example how to compute GST Compensation Cess:

The education cess of 4% on personal income tax of 30% is imposed as a tax on the prevailing 30%. As a result, the total tax rate goes up to 31.2%.

Cess on Goods and Service Tax is levied on intra or interstate supply of goods or services to provide compensation to the state for loss of revenue due to implementation of Goods and Services Tax.

Which goods will attract Cess on GST?

  • Pan masala,
  • Cigarettes,
  • Motor Vehicles,
  • Tobacco and Tobacco Products  Coal , briquettes , ovoid’s and similar solid fuel manufactured from coal lignite excluding jet and peat,
  • After that, aerated waters (carbonated water).

What is the rate of GST Compensation Cess Tax applicable?

  • Earlier, the education cess applicable was 3% however, while presenting new budget 2018-19  its replace with a 4% .
  • In addition, GST cess rate for tobacco product range from 11% to 290%
  • After that, cess on pansala is levied 60%.
  • However, cess applicable on aerated drinks is 12%
  • Govt increase cess ranging 2% to 7% on motor vehicles.
  • Similarly, cess on mid-sized cars would go up 2% to 17% .
  • In addition, GST compensation cess on coal and lignite @ Rs 400 per metric tonne.

Can input Credit be availed on Cess?

Yes, input credit can be availed on cess paid on inward supplies

In conclusion, credit of cess paid can be utilized only towards payment of cess liability.

Email your query at and know more about company registrationWhatsApp or Call us @ 7900 567 567, so that you can get your goods and services registration online and Cess on Goods and Services Tax.

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