GST Council meeting next month to discuss tax rate rationalization: FM

She also stated that the compensation cess on luxury and sin goods would be discussed, possibly during the September 9 meeting or afterward.

The Group of Ministers (GoM) on rate rationalization, led by Bihar Deputy Chief Minister Samrat Chaudhary, met last week and largely agreed to keep the existing GST slabs unchanged at 5, 12, 18, and 28 percent.

The panel also assigned the fitment committee—a group of tax officers—to assess the impact of adjusting rates on certain items and present their findings to the GST Council.

The final decision on rate rationalization will be taken in a subsequent meeting, Sithraman has said.

At the 53rd GST Council meeting on Saturday, Karnataka raised the issue of the continuation of the compensation cess levy, the repayment of the borrowed amount, and the future course of action.

Officials previously indicated that the government might repay the Rs 2.69 lakh crore borrowed in fiscal years 2021 and 2022 to compensate states for GST revenue losses by November 2025, four months ahead of the scheduled March 2026.

The apportionment of the cess amount beyond November 2025 could be a topic of discussion in the upcoming Council meeting.

The compensation cess was originally introduced for five years to offset states' revenue shortfalls following the GST implementation. Although the cess expired in June 2022, the funds collected are being used to repay the interest and principal of the Rs 2.69 lakh crore borrowed during the COVID-19 pandemic.

GST was launched on July 1, 2017, with states assured of compensation for revenue losses until June 2022 due to the GST rollout. However, while states' protected revenues grew at a compounded rate of 14 percent post-GST, the cess collection did not match this growth.

The COVID-19 pandemic further widened the gap between projected and actual revenue, including a decline in cess collection. The loan is scheduled to be repaid by March 2026.