What is the full form of CESS in GST?
The CESS Full Form in GST is Central Excise and Service Tax. The Indian tax system underwent a significant transformation in 2017 with the introduction of the Goods and Services Tax (GST). This comprehensive indirect tax regime replaced a multitude of levies, including Central Excise Duty and Service Tax, aiming to streamline tax administration and boost economic growth.
Central Excise and Service Tax: A Dinosaur of the Past
Before the advent of GST, the central government levied the Central Excise Duty on the production, manufacture, and clearance of goods within the country. Service Tax was levied on the provision of taxable services.
The Arrival of GST and the Departure of Central Excise and Service Tax
With the introduction of GST on July 1st, 2017, the Central Excise Duty and Service Tax were abolished. They were no longer levied separately. GST is a destination-based tax that is levied on the supply of goods and services at the place of consumption. This eliminated the cascading effect of taxes and made compliance simpler for businesses.
The Arrival of GST Compensation Cess
Along with the introduction of GST, a new tax called GST Compensation Cess was introduced. This cess is an additional tax levied on certain goods and services to compensate states for any loss of revenue that they may incur because of the introduction of GST.