New Delhi: The Goods and Services Tax (GST) Council is expected to deliberate on ending the compensation cess earlier than planned during its meeting scheduled for September 3. According to multiple media reports, the Council may propose concluding the levy by October 31, well ahead of the originally scheduled end date of March 31, 2026.

The compensation cess was introduced in 2017 for a five-year period to offset revenue losses incurred by states after the implementation of GST. However, it was extended beyond June 2022 to help service the Rs 2.69 lakh crore borrowed by the Centre on behalf of the states during the Covid-19 pandemic.

Sources indicate that the loan repayments are nearing completion and are expected to be fully settled by around October 18. To ensure a smooth transition, the cess may continue through the end of October before being phased out.

Government sources also suggest that the cess collection could yield a surplus of Rs 2,000–3,000 crore, which is likely to be shared equally between the Centre and the states.

As per the GST (Compensation to States) Act, 2017, the compensation cess must cease once the borrowed amount is repaid. With repayments nearing completion, the Council is now considering wrapping up the cess collection process ahead of the planned 2026 deadline.

The Finance Ministry has sent its proposal to the GST Council for two GST rates of 5 per cent and 18 per cent across all goods, which will replace the existing four slab structure. Prime Minister Narendra Modi announced on Sunday that citizens will receive a double bonus this Diwali through a planned GST reform aimed at reducing prices of goods and services for the poor and middle class. IANS