GST Council Meet Likely To Occur In Early July; Key Focus On Compensation Cess Future

After a period of over six months Goods and Services Tax Council (GST) is reportedly expected to meet in early July ahead of the Monsoon Sessionof Parliament.  

The official date and agenda pertaining to the upcoming GST Council meet is expected to be announced post confirmation of date.

The key areas of focus includes where the compesnation cess is headed after it comes to an end in 2026. This is major cause of concern for both centre and states as it signals a significant loss in revenue from high-ticket items such as automobiles, tobacco, and aerated drinks. The cess could possibly be turned into a tax levy with concerns from certain states that a cess would directly go to the Centre.

The loss may be offset if the GST Council agrees to amend the legal cap on GST rates to go beyond the current 40 percent, allowing for a merger of the cess with GST rates once the levy is withdrawn.

What To Expect From The Upcoming GST Council Meet? 

With rising demand for simplification of the tax, a separate taskforce of state and Central officials could also be in the works. 

The Group of Ministers on the compensation cess have reportedly reached on an unanimous conclusion to support merging the cess with GST rates, which would be applicable on the current items that attract the cess such automobiles, and tobacco products.

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“All states are in favour that the cess should continue in some form or the other due to revenue considerations,” explained the source. An enabling amendment to the GST law will have to be made to continue the cess in the new form.

However, discussions on a significant rate rationalisation under GST could take longer as there continue to be concerns amongst various states on the impact on revenue of such a move.

The Union Finance Ministry has also been taking views from various stakeholders including industry chambers on changes to be made in GST. Union finance minister Nirmala Sitharaman is also set to meet officials of the Central Board of Indirect Taxes and Customs on June 20 when she is expected to get more feedback on the on ground challenges being faced for GST.

The GST Council had last met on December 21, 2024 in Jaisalmer and expectations have been that it would meet soon to take up these key issues.