Glossary
What is cess in GST?
An extra levy on a short list of goods, charged as its own line on top of GST.
Updated
In short
Cess under GST is the compensation cess levied on a short list of goods, such as tobacco products, on top of GST. SimpleERP does not calculate cess, so it is not the right billing tool for goods that attract it.
Cess under GST is the compensation cess, a levy charged on top of GST on a short list of goods so that states could be compensated for lost revenue. It is shown as its own line on the invoice, and cess paid on purchases can be credited only against cess on sales. From 22 September 2025 it was removed from most goods and continues mainly on tobacco and related products.
Cess: a worked example
Lakshmi Steel Furnitures' racks, chairs and LED panels carry no cess, so its invoices show only CGST and SGST or IGST. For illustration only, if a product carried GST of 40% and a cess of 5% on a taxable value of ₹10,000, the invoice would show GST of ₹4,000, cess of ₹500 and a total of ₹14,500. These are not the rates for any real product. Rates change, so confirm the rate for your goods with your CA or the GST portal before you rely on it.
FAQ
Questions, answered
Is cess still charged after the September 2025 GST changes?
On a much shorter list. Compensation cess was removed from most goods, including cars and aerated drinks, on 22 September 2025, with those goods moved into the 18% or 40% slabs. It continues mainly on tobacco and related products until the related loans are repaid. Confirm current notifications.
Can I use cess credit to pay GST?
Cess credit cannot pay GST. Credit of cess paid on purchases can be used only to pay cess on sales. It cannot pay CGST, SGST or IGST, and GST credit cannot pay cess. Businesses that stopped selling cess goods may be left holding cess credit.
Does cess appear on the invoice?
Cess appears on the invoice as its own line with its rate and amount, separate from CGST, SGST or IGST. It is also reported separately in GSTR-1 and paid separately in GSTR-3B, so the cess head never mixes with GST.
Do I charge cess on goods I buy and resell?
Cess is charged on resold goods if the goods attract cess when you sell them, whether you made them or bought them. It is charged on each sale in the chain, with credit for cess paid on the purchase, the same way as GST itself.
Related
Keep reading
GST
India's tax on the supply of goods and services, charged at each stage with credit for inputs.
Read moreGSTR-3B
The summary GST return where you declare sales, claim credit and pay the net tax.
Read moreGST rate changes 2025
What the 2025 GST rate changes mean for your products, draft invoices, credit notes and stock, with a checklist to update your billing.
Read more
Run your whole business from one simple place.
Seven days free. No card. Your first GST invoice in minutes.