GST Council discussing compensation cess, rate rationalisation: FM
The GST Council is seriously discussing rationalisation, going through GST rates “item by item”, the Union Finance Minister, Nirmala Sitharaman, said in an interaction with the journalists of The Hindu group of publications, on Saturday.
Discussions have been going on in the GST Council on questions such as whether there should be four rates (5, 12, 18 and 28 per cent) and which items should attract what rate.
GST compensation
Answering a question on GST compensation and the compensation cess, the Finance Minister categorically said that continuing to give GST compensation to States was out of the question. Whether the compensation cess (which is to end in March 2026) would continue or not or if it would continue, and in what form, is currently being discussed by the GST Council.
Sitharaman said the States were better off after GST as they got more revenue than before. She noted that the revenue of Tamil Nadu, for example, never grew more than 6.5 per cent before 2017. Taking that as the baseline for calculating the State’s tax revenues, assuming GST had not been there and comparing it with what the State got after GST, she said the State was better off by Rs.1 lakh crore. On the government continuing to levy a cess (even after the compensation ceased), she said that levying a cess to raise revenue was “constitutionally legitimate”.
