With reference to the Compensation Cess, consider the following statements:
1. It can be levied by both the Centre and states.
2. Proceeds of this cess will be distributed among the states.
Which of the statements given above is/are correct?
A
1 only
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B
2 only
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C
Both 1 and 2
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D
Neither 1 nor 2
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Solution
The correct option is B 2 only GST Compensation Cess is levied under The Goods and Services Tax (Compensation to States) Act 2017. The object of levying this cess is to compensate the states for the loss of revenue arising due to the implementation of GST on 1st July 2017 for a period of five years or such period as recommended by the GST Council.
Proceeds of this cess will be distributed among the states.