GST council to discuss rationalisation of tax rates on September 9:FM Nirmala Sitharaman
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Finance Minister Nirmala Sitharaman has said that the Goods and Services Tax (GST) council is going to discuss rationalisation of tax rates at the 54th GST Council meeting on September 9, 2024 but a final decision on tweaking taxes and slabs will be taken in a subsequent meeting. She also said that compensation cess on luxury and sin goods are also going to be discussed and can come up in the September 9 meeting or later.
At the 53rd GST Council meeting, it was learnt that Karnataka had raised the issue of continuation of compensation cess levy, repayment of the loan amount and its way forward. A compensation cess was initially brought in for 5 years to make good the revenue shortfall of states following the implementation of the GST. The compensation cess expired in June 2022, but the amount collected through the levy is being used to repay the interest and principal of the Rs 2.69 lakh crore that the Centre borrowed during COVID-19.
The upcoming GST Council meeting will now have to take a call on the future of the current GST compensation cess with regard to its name and the modalities for its distribution among the states once the loans are repaid. To meet the resource gap of the states due to the short release of compensation, the Centre borrowed and released Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 as back-to-back loans to meet a part of the shortfall in cess collection.
