Overview

• A Group of Ministers led by Pankaj Chaudhary is finalizing proposals to replace the compensation cess with dedicated health and clean energy levies.
• Government sources indicate sin goods such as cigarettes and carbonated drinks and luxury vehicles could face higher levies under the proposed framework.
• The GST Council is considering scrapping the 12% slab and reallocating products into 5%, 18%, and 28% tiers to simplify taxation.
• The overhaul aims to safeguard state revenues after the compensation cess expires on March 31, 2026 while supporting environmental and health goals.
• Final proposals are slated for debate at the next GST Council meeting and may require new revenue-sharing arrangements and constitutional amendments.