India GST Panel Decides to Extend Compensation Levy Beyond 2022

India will extend a levy on sin and luxury goods beyond 2022 to meet the revenue gap caused by the coronavirus pandemic, Finance Minister Nirmala Sitharaman said.

The compensation cess -- collected from goods such as tobacco products, coal, aerated drinks and automobiles -- slowed last year, leading to delays in dues to states. The government has given states an option to borrow 1.1 trillion rupees ($15 billion) to meet part of the shortfall in goods and services tax compensation.

“The cess will have to be extended beyond the five years for which it was originally mandated,” Sitharaman, who heads ...