Centre, states inch closer to consensus on GST cess

Scrapping 12% GST slab may have to wait; GST compensation cess expires in March

- Gireesh Chandra Prasad

The Centre and states are close to agreeing on folding the GST compensation cess within the broader goods and services tax (GST), two people aware of discussions in the government said.

The two sides are also close to reaching an agreement on how to utilize the surplus cess collected, likely by dividing between them.

Without a decision on its future, the compensation cess on luxury goods and tobacco, which is expected to fetch ₹1.67 lakh crore this fiscal, clocks out at the end of March next year after an eight-year run.

However, there is no consensus yet on scrapping the 12% GST slab, one of the two people said.

The Centre's view is that moving most goods in that slab to 5% will help widen the tax base, making up for the revenue loss in due course.