Compensation cess on specified supplies and imports funds state revenue shortfalls; credit limited to cess liability only.

Compensation cess imposes an additional charge on specified supplies and imports to compensate States for GST-related revenue loss, with intra-State levy governed by CGST provisions and inter-State levy by IGST provisions; customs rules apply to imports and refunds/exemptions apply to exports under bond. Input tax credit for the cess is strictly usable only to pay compensation cess liabilities and not other GST components, and persons under the composition scheme are not subject to the cess. Valuation for cess based on value follows CGST valuation rules.

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