Minutes: GST Council Forms Group to Review State Revenue Impact and Compensation Cess Structure Beyond 2026.
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GST
The GST Council approved formation of a GoM on restructuring Compensation Cess to examine revenue impacts on states post-GST implementation. Key points: Karnataka raised concerns about revenue loss of approximately 0.7% of GSDP despite higher GST collections and growth rates compared to national average. The state clarified this was due to being a producer state under destination-based taxation. The Council agreed to form a GoM chaired by Minister of State (Finance) to: – Analyze state-wise revenue data considering COVID-19 impacts – Review compensation cess structure beyond March 2026 – Examine challenges faced by manufacturing states – Consider solutions within GST's destination-based framework Pre vs Post-GST comparison shows: – Pre-GST (2012-16): 8.3% growth rate, 11.5% GDP growth, 0.72 tax buoyancy – Post-GST (2018-23): 12.3% growth rate, 9.8% GDP growth, 1.25 tax buoyancy The GoM will submit detailed analysis and recommendations for Council's consideration before compensation cess expires in March 2026.
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