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?

1 only

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2 only

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Both 1 and 2

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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.

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Similar questions

With reference to Cess, consider the following statements:

1. Proceeds of Cess are distributed on the recommendation of Finance Commission.

2. Cess before levying needs to be passed through parliament by a simple majority.

3. Cess is earmarked for a particular purpose only and cannot be used for any other purpose.

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