According to a source, the GST Council will probably convene shortly to talk about the future of the compensating cess as well as rate simplification and rationalization”. Simplifying the GST involves three or four distinct factors. The source said, “We will address the issues of compensation cess, rate rationalization, and simplification.”

At its December meeting last year, the GST Council—which is led by the Union finance minister and includes state counterparts—did not discuss the GoM recommendations on health and life insurance rate reduction and rationalization.

The final reports from the two GoMs, which suggested lowering rates and exempting certain groups, have not yet been sent to the GST Council.

Under the direction of Minister of State for Finance Pankaj Chaudhary, the GoM on Compensation Cess is investigating the compensation cess’s prospects beyond March 2026.

Currently, the cess is solely used to repay debts taken out during the COVID-19 pandemic in order to compensate states for the loss of GST earnings. It is imposed on luxury and sin items.

The GoM is now researching how to distribute the cess money between the states and the Center and how to keep it in some other way.