FM Sitharaman Says GST Council To Deliberate Tax Rate Rationalisation, Decision To Be Taken Later

The GST Council is scheduled to meet on September 9, 2024. Sitharaman said that the meeting will also include a discussion on the compensation cess on luxury and sin goods

The last meeting of the GST Council saw Karnataka raise the matter of the continuation of compensation cess levy, loan repayment, and the way ahead.

Source : PTI

Finance Minister Nirmala Sitharaman said that the GST Council will hold a dialogue on the rationalisation of tax rates in its upcoming meeting next month. Speaking to the media on Tuesday, the minister said that a final call on revisions in taxes and slabs will, however, be taken later.

The GST Council is scheduled to meet on September 9, 2024. Sitharaman said that the meeting will also include a discussion on the compensation cess on luxury and sin goods, reported PTI. Notably, the Group of Ministers (GoM) on rate rationalisation chaired by Samrat Chaudhary, Deputy Chief Minister, Bihar, convened last week. The overall decision of the meeting was that Goods and Services Tax (GST) slabs will be kept unchanged at 5, 12, 18, and 28 per cent.

“The upcoming GST Council meeting will take up the issue of rate rationalisation. There will be a discussion on the issue. Committee of officers will make a presentation on rate rationalisation,” the Finance Minister said. However, she added that any final call on the matter would taken in another meeting later on.

Further, the panel called on the fitment committee, comprised of a group of tax officers, to evaluate the consequences of making any revisions in these rates on certain items. The committee will present its findings later before the GST Council.

Compensation Cess And Why It Was Introduced

The September meeting of the GST Council will be chaired by Nirmala Sitharaman and will include state ministers. The 54th meeting will be held on September 9. The last meeting of the GST Council saw Karnataka raise the matter of the continuation of compensation cess levy, loan repayment, and the way ahead. Earlier officials noted that the Centre might be able to clear its dues worth Rs 2.69 lakh crore, borrowed in the 2020-21 and 2021-22 fiscal years to compensate the states for GST revenue loss by November 2025. 

Initially, the compensation cess was introduced for five years to offset the lack of revenue for the states in the aftermath of the implementation of GST. The cess expired in June 2022, however, the funds collected via the levy are being utilised towards repayment of interest and principal of the Rs 2.69 lakh crore borrowed by the Indian government during the COVID-19 pandemic.