On the demand of states, especially of the Opposition-ruled states such as Karnataka, the upcoming GST Council on September 9 is likely to have a detailed discussion on the compensation cess collections so far, since the time of roll-out of GST.

Sources said the GST Council is likely to deliberate on the provision of cess and the collections, the outgo and the tenure till when it is likely to continue. “According to the central government estimates, the GST Compensation cess collections are likely to be continued through FY26,” sources said.

“To repay the back-to-back loans taken to assist the states during the COVID years to meet the guaranteed commitment given to the states at the time of launch of GST, it is estimated that there is a potential shortfall of around ₹1.37 lakh crore in the cess kitty,” sources said.

This, to repay the pending ₹1.37 lakh crore, the government estimates that the collections of cess “need to continue through FY26”, sources added.

The council will be presented with a detailed maths on the subject. “As per the government estimates, total compensation cess collections around are ₹8.60 lakh crore (up to March 2025).

The compensation paid to states till August 2024 stands at ₹6.64 lakh crore. The government had helped states with a back-to-back loan of ₹2.69 lakh crore. The interest on loans is estimated at about ₹51,000 (approximately). This, the shortfall that needs to be cleared to meet total liability post the loans is ₹1.37 lakh crore,” sources said.

To be seen is how the states react to the proposal to collect the compensation cess till FY26.

Source: CNBC TV 18