Levy of GST Compensation Cess by Central Government :
Section 8(1) of GST Cess Act states that GST Compensation Cess shall be levied on goods or services or both as provided in section 9 of CGST Act and section 5 of IGST Act. This cess is to compensate States for loss of revenue arising out of implementation of GST. It will be for five years from date of implementation of CGST Act. The period can be extended or curtailed by GST Council.
GST Compensation Cess will be payable on basis similar to CGST Act – section 9 of GST Cess Act.
No cess when GST payable under composition scheme – No GST Compensation cess shall be leviable on supplies made by a taxable person permitted to opt for composition levy under section 10 of the CGST Act, 2017 (i.e. composition scheme) – proviso to section 8(1) of GST Cess Act.