With reference to the GST compensation cess, consider the following statements:1.If a GST compensation cess is levied on any product, GST(Goods and services tax) is not levied on it to prevent cascading of prices.2. The proceeds of the compensation cess will be credited to the Consolidated fund of India. Which of the statements given above is/are correct?

Q. With reference to the GST compensation cess, consider the following statements:
1.If a GST compensation cess is levied on any product, GST(Goods and services tax) is not levied on it to prevent cascading of prices.
2. The proceeds of the compensation cess will be credited to the Consolidated fund of India.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: D

Notes:

In order to mobilise resources for compensation, a cess is being levied on such goods, as recommended by the Goods and Services Tax Council, over and above the GST on that item. It is called compensation cess. As on date, compensation cess is levied on products such as pan masala, tobacco, aerated waters and motor cars apart from coal.

The proceeds of the compensation cess will be credited to a non-lapsable fund known as the Goods and Services Tax Compensation Fund in the public account.

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