7 reasons why GST meet on Sept. 9 is important

The 54th GST Council meeting, led by Finance Minister Nirmala Sitharaman and involving state ministers, is scheduled for September 9. This meeting will focus on important matters, including the possible rationalization of tax rates.

While the meeting will explore the rationalization of tax rates, any final decisions on adjusting taxes and slabs will be made at a later time.

According to CNBC TV 18, which cited government sources, the meeting is also expected to discuss the GST compensation cess. There is a high likelihood that the Centre may stop providing back-to-back GST loans to states before March 2026.

Here's why the GST Council meeting is significant:

1. The upcoming meeting will address the issue of rate rationalization.
2. It is anticipated that the meeting will keep the existing GST slabs unchanged at 5%, 12%, 18%, and 28%. This comes after the Group of Ministers (GoM) on rate rationalization, headed by Bihar Deputy Chief Minister Samrat Chaudhary, met last week and generally reached an agreement on the matter.
3. The GST Council will also review a presentation on the impact of adjusting rates for certain items. This follows the GoM panel's direction for the fitment committee, a team of tax officers, to work on this issue.
4. No changes are expected regarding the tax treatment under the Unified Payments System (UPS).
5. The meeting will also discuss the compensation cess on luxury and sin goods.
6. During the 53rd GST Council meeting held on Saturday, Karnataka raised concerns about continuing the compensation cess levy, loan repayments, and future plans. Officials suggested that the government might repay the Rs 2.69 lakh crore borrowed for GST compensation by November 2025, ahead of the March 2026 deadline. The Council may also deliberate on how to manage the distribution of the cess after November 2025.
7. The compensation cess, which was introduced for five years to offset states' revenue shortfalls from GST, expired in June 2022. However, the funds collected are still being used to repay the Rs 2.69 lakh crore borrowed during the COVID-19 pandemic. The GST Council will now determine the future of the compensation cess, including its name and how it will be distributed, once the loans are fully repaid.