GST completes its five years anniversary on 1st July 2022 next year; when compensation to states is set to come to an end
GST completes its five years anniversary on 1st July 2022 next year when compensation to states is set to come to an end. There could be a significant restructuring in Tax slabs and thereby reducing the amount of exemptions.
The Centre has determined that states will not be compensated for revenue losses caused by the implementation of GST for another five years. Instead, the Centre has stated that the Compensation Cess will be levied till March 2026 in order to return the money borrowed to compensate the states until July 2022.
The new regime will have three major tax rates covering most of the items against four now – 5%, 12%, 18% and 28%.
The move will simplify the regime as well as lift the revenue of the government. The Centre compensates states for loss of revenue on account of the implementation of GST will end next year. This would lead a significant drop in their revenues once this compensation ends.