GST Update- After a gap of more than six months, the Goods and Services Tax (GST) Council is expected to meet in early July before the monsoon session of Parliament. According to sources, the council meeting was earlier scheduled to be held in June, but now it is likely to be held in July due to the big agenda before it.
The formal date of the GST Council meeting has not been announced yet and the agenda is also expected to be finalized later. However, sources indicated that along with changes in GST rates, changes in compensation cess will also be discussed. With the growing demand to simplify the cess, a separate task force of state and central officials can also be set up.
Important changes can be made regarding cess
According to sources, discussion on compensation cess will be an important issue, as it is going to expire in March 2026. Cess can possibly be converted into a tax, as some states are concerned that the cess will go directly to the Center. It can also be understood this way that the Group of Ministers on Compensation Cess has also supported the merger of the cess into GST rates, which will be applicable on currently cessed goods like automobiles, tobacco and cold drinks.
Compensation cess was imposed to compensate the states for the loss of revenue and GST was implemented on July 1, 2017. It was then decided that the central government will compensate the states for the loss of revenue due to the implementation of the GST system and now this system is going to end in March 2026. Earlier it was going to end in June 2022, but during Covid, the Center had taken a loan to compensate the states for the loss of revenue. The period of cess was extended to return the loan money.
Sources said that the Group of Ministers has agreed to remove the existing cess and now it is proposed to impose Health Cess and Clean Energy Cess in its place. Health Cess will be imposed on sin goods like tobacco. Clean Energy Cess will be imposed on coal and luxury automobiles.