The GST Council is likely to meet soon to discuss simplification of tax slabs and rate rationalisation along with a discussion on the future course of levy of the compensation cess, a government source said. The discussions will begin in the next Council meeting but will not conclude in one meeting as all the details need to be discussed threadbare, the source said.
“There are three or four different aspects relating to making GST simpler. We will take up the issue of compensation cess, rate rationalisation and simplification,” the source said.
The GST Council, chaired by the Union Finance Minister and comprising state counterparts, in its meeting in December last year, had deferred a decision regarding lowering of GST rates on health and insurance premiums. The members of the GST GoM on health and life insurance premium had felt that more discussions were required as some states were concerned about the revenue loss impact for states from the proposed reduction in GST rates. Also, comments from insurance regulator IRDAI were awaited on the issue of lowering GST on insurance premiums.
The Group of Ministers on rate rationalisation had sought more time to discuss the proposal to tweak rates on as many as 148 items. The GoM on compensation cess was also given an extension by the Council to submit its recommendations.
The GoM on Compensation Cess, headed by Minister of State for Finance Pankaj Chaudhary, is looking into the future course of compensation cess beyond March 2026. As of now, the cess is being levied on luxury and sin goods but is being utilised only for paying back loans taken during the pandemic to make good the loss to states in GST revenues. GoM is now studying how to retain the revenue from cess in some other form and how to share it between the Centre and the states.
