GST Council Discusses Rate Rationalization and Compensation Cess: Key Updates from FM Nirmala Sitharaman
By: Admin
Date: September 23, 2024
Categories: GST Recent News
Reading Time: 4 Minutes
The GST Council is actively reviewing GST rate rationalization, going through rates “item by item,” according to Union Finance Minister Nirmala Sitharaman. In an interaction with journalists from The Hindu, she addressed several key issues, including the ongoing discussions on GST rates, the future of compensation cess, and disaster relief funding.
GST Rate Rationalization
The Finance Minister revealed that the GST Council is considering whether to maintain the current four-tier tax structure of 5%, 12%, 18%, and 28%, or to streamline it further. The Council is debating which items should attract specific rates in order to create a more balanced tax framework.
GST Compensation to States
Sitharaman emphasized that extending GST compensation to states beyond the current period is “out of the question.” However, the future of the GST compensation cess, which is set to end in March 2026, remains a topic of discussion. The Finance Minister noted that States are already benefitting from GST implementation, citing Tamil Nadu as an example where revenues have significantly improved post-GST, with the State gaining ₹1 lakh crore more than it would have under the old tax system.
Compensation Cess and Revenue Generation
The Finance Minister defended the continuation of the compensation cess to raise revenue, calling it “constitutionally legitimate.” Discussions are ongoing regarding whether this cess will continue post-2026 and in what form, as the GST Council evaluates future fiscal needs.
Disaster Relief Funding
On the issue of disaster relief, Sitharaman responded to complaints from Tamil Nadu regarding insufficient funds, explaining that allocations are made based on guidelines from the Finance Commission. She reiterated that the National Disaster Relief Fund follows a standard operating procedure, and no State is favored or denied. She also pointed out the Central government’s facilitation of a ₹9,000 crore loan for drainage projects in Chennai as part of its disaster relief efforts.
Chennai Metro and International Loans
Addressing concerns over the funding for Chennai Metro Phase 2, Sitharaman clarified that Tamil Nadu opted to make the project a State-sector initiative in 2018, limiting the Centre’s role to arranging international loans. The Central government has already secured ₹32,000 crore in international funding for the project.
Census Postponement
Finally, Sitharaman touched on the delay in the Census, citing the Covid pandemic and elections as reasons for the postponement. She assured that the Census would be conducted soon and dismissed claims that the government is reluctant to carry it out.
#GSTCouncil #TaxRateRationalization #CompensationCess #GSTIndia #NirmalaSitharaman #TaxUpdates #DisasterReliefFunds #ChennaiMetro #IndianEconomy #CensusUpdate #FinanceMinister #GSTRevenue #IndiaTaxNews
