GST Compensation Cess Rates on Goods as on 1 September 2026
GST Compensation Cess was introduced under the Goods and Services Tax (Compensation to States) Act, 2017 and was historically levied on specified goods in addition to the applicable GST. The notified rate position has since changed materially.
Current position: As on 1 September 2026, the goods that earlier carried positive GST Compensation Cess rates are at Nil Compensation Cess. The principal change for aerated beverages, coal and specified vehicles took effect on 22 September 2025. The remaining notified pan-masala and tobacco entries were reduced to Nil from 1 February 2026.
Accordingly, the former cess rates such as 12% on aerated waters, ₹400 per tonne on coal, percentage-based cess on specified motor vehicles, and the earlier ad valorem/specific rates on pan masala and tobacco should not be used for supplies made under the current rate regime.
Important: Nil Compensation Cess does not mean Nil GST. CGST, SGST/UTGST or IGST may still apply according to the current GST rate, classification, valuation and exemption provisions for the particular goods.
Current Compensation Cess Rate Table
| HSN / Category | Goods covered | Current Compensation Cess | Effective current position |
|---|---|---|---|
| 2106 90 20 | Pan masala and notified related entries | Nil | 1 February 2026 |
| 2202 | Aerated waters, lemonade, other specified aerated/caffeinated and fruit-based carbonated beverages covered by the cess schedule | Nil | 22 September 2025 |
| Chapter 24 | Notified tobacco, cigarettes, cigars, cigarillos, chewing tobacco, hookah/gudaku tobacco, snuff, tobacco extracts, gutkha and specified tobacco/nicotine products | Nil | 1 February 2026 |
| 2701, 2702, 2703 | Coal, lignite and peat covered by the compensation cess schedule | Nil | 22 September 2025 |
| Chapter 87 | Specified motor vehicles, including categories that previously attracted 1%, 3%, 15%, 17%, 20% or 22% Compensation Cess | Nil | 22 September 2025 or already Nil, as applicable |
| 8711 | Motorcycles of engine capacity exceeding 350 cc | Nil | 22 September 2025 |
| 8802 | Specified aircraft for personal use | Nil | 22 September 2025 |
| 8903 | Yachts and other vessels for pleasure or sports | Nil | 22 September 2025 |
| Other goods | Goods not specifically carrying a positive Compensation Cess rate | Nil | Current position |
Major Changes to Compensation Cess
- 22 September 2025: Notification No. 02/2025-Compensation Cess (Rate), dated 17 September 2025, substituted Nil for specified entries covering aerated beverages, coal/lignite/peat, specified motor vehicles, motorcycles above 350 cc, personal-use aircraft and yachts/pleasure vessels.
- 1 February 2026: Notification No. 03/2025-Compensation Cess (Rate), dated 31 December 2025, substituted Nil for the remaining notified pan-masala and tobacco-related entries.
- 1 September 2026: For current supplies, the earlier positive Compensation Cess figures appearing in historical rate tables should not be applied without checking the effective-date provisions relevant to the transaction.
Official References
CBIC Notification No. 02/2025-Compensation Cess (Rate)
- effective 22 September 2025
CBIC Notification No. 03/2025-Compensation Cess (Rate)
- effective 1 February 2026
Goods and Services Tax (Compensation to States) Act, 2017 - CBIC
CBIC GST Goods and Services Rates
For transactions relating to earlier tax periods, determine the applicable rate with reference to the date of supply and the notification in force on that date. This page states the current position as on 1 September 2026.