GST cess will be used till March 2026 to repay loans: Finance minister

NEW DELHI: Finance minister Nirmala Sitharaman on Friday said that the cess on goods such as soft drinks, tobacco, coal and cars will go towards repayment of loans to compensate states for GST (goods and services tax) shortfall up to March 2026, suggesting that the demand for states to extend the compensation period was a tough ask.

Sitharaman also pointed to a study by the Reserve Bank of India (RBI), which had pegged the average GST levy at 11.5% against the revenue neutral rate of 15.5%, in what was a further indication that resources to compensate states longer than mandated were tough to come by. Over the last four years, the GST Council has cut rates on hundreds of items to provide relief to consumers.