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The Group of Ministers (GoM) tasked with restructuring the Compensation Cessation has requested an extension until June 30, 2025, to finalize the roadmap for the cessation, sources told Business Today TV.
This decision follows discussions held during the 54th GST Council meeting in September 2024, where the GoM was formed to propose a replacement of the Compensation Levy after its abolition in 2026.
In its first two meetings, on October 16 and December 12, 2024, the Government of Mexico focused on two key issues: the continuation of the transfer through fiscal year 2025-26 and the distribution of surplus funds once the assignment ends. The Government of Mexico agreed that the tax should remain in force until March 31, 2026, at the current rate. Further, any excess collection remaining after clearing outstanding loans will be divided equally between the Center and the states, in accordance with the provisions of the GST Compensation Cessation Act.
However, the Government of Mexico recognized that more time is needed to address the constitutional, legal and operational issues related to the post-cessation phase, particularly the impact on state revenues. As a result, the panel decided to seek an extension to better analyze the situation before proposing a new course of action.
The 10-member GoM is chaired by Minister of State for Finance Pankaj Chaudhary and includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal. The group was tasked with submitting its first report by December 31, 2024.
