Extension is notified as per the compensation schedule agreed upon in September 2021 GST Council assembly. The extension is facilitated to repay the borrowing made up to now to pay the promised compensation to states.
GST Compensation Cess is levied by the Items and Providers Tax (Compensation to States) Act 2017. The article of levying this cess is to compensate the states for the lack of income arising as a result of implementation of GST on 1st July 2017 for a interval of 5 years or such interval as beneficial by the GST Council.