The Union Finance Minister Nirmala Sitharaman chaired the 55th meeting of the GST Council today (21st December 2024) at Jaisalmer, Rajasthan. The 55th GST Council has announced a big relief for merchant exporters by reducing the Compensation Cess to just 0.1% on supplies made to them. This decision aims to reduce costs for exporters and make Indian goods more competitive in global markets.
“There is a reduction in the rate of compensation cess to 0.1% on supplies to merchant exporters, at par with the GST rate on such supplies. This was a particularly important request which had come from traders and exporters,” said the Finance Minister during the press conference.
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The Council, led by Finance Minister Nirmala Sitharaman, approved this change during its meeting today. The Compensation Cess which is usually charged on luxury and demerit goods, will now be much lower for supplies to merchant exporters.
This reduction is expected to lower the cost of procurement for merchant exporters, enabling them to offer better pricing in global markets. Merchant exporters, who act as intermediaries, typically face challenges related to tax refunds and compliance. With this simplified cess structure, their operational efficiency is likely to improve.
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Lowering the cess means exporters will spend less on taxes, reducing their overall costs. This makes it easier for them to sell products at competitive prices in international markets. The government hopes this will encourage more exports and help achieve its goal of ₹2 trillion in exports by 2030.
Although exports are zero-rated under GST, exporters often face challenges like higher costs of inputs and taxes. By reducing the cess, the government is addressing these issues and making it easier for exporters to do business.
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