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What is GST Compensation Cess in GST
Cess is an Additional Tax which is charged on some goods
It is charged on some luxury items like
Pan Masala
Cigarettes
Aerated waters(Cold Drinks)
Motor Vehicles etc
Example 1
| Local Sales of Item with 28% GST | Local Sales of Item with 28% GST+17% CESS | ||
| PARTICULARS | AMT | PARTICULARS | AMT |
| SALES | 100000 | SALES | 100000 |
| CGST 14% | 14000 | CGST 14% | 14000 |
| SGST 14% | 14000 | SGST 14% | 14000 |
| CESS 17% | 17000 | ||
| TOTAL | 128000 | TOTAL | 145000 |
Example 2
| Interstate Sales of Item with 28% GST | Interstate Sales of Item with 28% GST+17% CESS | ||
| PARTICULARS | AMT | PARTICULARS | AMT |
| SALES | 100000 | SALES | 100000 |
| IGST 28% | 28000 | IGST 28% | 28000 |
| CESS 17% | 17000 | ||
| TOTAL | 128000 | TOTAL | 145000 |
Why GST Compensation Cess was introduced?
Maximum GST Rate is 28%
However on certain items ,more rate was charged under VAT
Hence some certain manufacturing states like Maharashtra Revenue faced loss in revenue
So in order to compensate them,this GST Compensation Cess is introduced
Whether Input Tax Credit of this Cess Available
Yes
Input is available but it can be utilized against output of CESS only
It cannot be adusted against CGST,SGST,IGST or vice versa
Q1 -
| Local Purchase of Goods | 100000 |
| 18% GST+22% CESS Extra | |
| Local SALE OF GOODS | 70000 |
| 18% GST+22% CESS Extra | |
| What is GST Payable/credit |
Answer
| Local Purchases of Item with 18% GST+22% Cess extra | Local Sales of Item with 18% GST+22% Cess extra | ||||
| PARTICULARS | AMT | PARTICULARS | AMT | ||
| PURCHASES | 100000 | SALES | 70000 | ||
| CGST 9% | 9000 | CGST 9% | 6300 | ||
| SGST 9% | 9000 | SGST 9% | 6300 | ||
| CESS 22% | 22000 | CESS 22% | 15400 | ||
| TOTAL | 140000 | TOTAL | 98000 | ||
| PARTICULARS | CGST | SGST | CESS |
| OUTPUT | 6300 | 6300 | 15400 |
| INPUT | 9000 | 9000 | 22000 |
| GST CREDIT | 2700 | 2700 | 6600 |
