GST Council Set To Review Slab Rates & Compensation Cess

The GST Council is preparing for a key meeting that could reshape India’s tax landscape. This review may be the most significant since the GST rollout on 1 July 2017. The council aims to simplify rates and boost economic activity.

Officials have proposed major changes to GST slabs. The 12% slab may be removed entirely. If approved, this move could lower taxes on several items and simplify the tax system.

Consumer goods currently taxed at 28% may also shift to lower brackets. The council aims to make the regime fairer and more efficient.

The council may shift pure term insurance policies from the 18% GST slab to a zero-tax category. The life insurance sector has demanded inclusion under a 12% slab.

However, reports suggest the government may exempt it entirely to help the middle class.

Health insurance could also provide relief. The Centre is considering rate cuts to support rising healthcare expenses.

Compensation cess under review

Revising the compensation cess is also on the agenda. The council will assess how to continue supporting states’ post-GST compensation phase-out.

Some states have demanded the cess continue for a limited period. Others want it phased out completely to reduce the tax burden on consumers.

Discussions on GST simplification have taken place for over a year. However, little progress has been made. This meeting could break the deadlock and push long-awaited reforms forward.

In June 2025, India collected ₹1.85 lakh crore in GST revenue. This figure marks a 6.2% increase year-on-year.

Despite the growth, collections dropped from record levels in April (₹2.37 lakh crore) and May (₹2.01 lakh crore).

Since its launch, the GST regime has expanded significantly.

In FY25, GST collections reached ₹22.08 lakh crore—double the ₹11.37 lakh crore collected in FY21.

The taxpayer base also grew from 60 lakh to over 1.51 crore in eight years. These gains show the GST system’s maturing impact on India’s economy.

This GST Council meeting could bring crucial reforms for taxpayers and industries. Key decisions on slab rates, insurance, and cess could impact every household.

If passed, the proposals may lower costs, improve compliance, and increase consumption, supporting India’s economic momentum in FY26 and beyond.

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