Under the GST regime, a compensation cess is imposed on luxury, sin, and demerit goods in addition to the 28% GST rate.

Council has set up a 10-member GoM, chaired by Minister of State for Finance Pankaj Chaudhary, to decide on the taxation of luxury, sin and demerit goods once the compensation cess ends in March 2026.

With just one-and-a-half year remaining for the cess to end, the GST Council in its 54th meeting on September 9 decided to set up a GoM to decide the future course of the cess. "The Terms of Reference of the GoM is to make taxation proposal to replace compensation cess after its abolition," the GST Council Secretariat said in an office memorandum.

The GST Council Secretariat has hinted in an office memorandum that the terms of reference of the GoM is to make a taxation proposal to replace compensation cess after its abolition. (Representative Image: DC)

The Group of Ministers (GoM), which includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal, will submit its report to the Council by December 31.