The Finance Ministry has confirmed that all provisionally admissible GST compensation dues for the five-year transition period from July 1, 2017, to June 30, 2022, have been fully released to states and union territories. In a written reply to Parliament on July 22, 2025, the Ministry clarified that no dues remain pending except for Arunachal Pradesh and Manipur, where Accountant General (AG) certificates are still awaited for final settlement.
The clarification marks the formal closure of the compensation disbursement process, which was instituted to offset revenue shortfalls for states following the rollout of the Goods and Services Tax (GST).
To navigate the post-compensation cess era, the GST Council, during its 54th meeting held on September 9, 2024, recommended the formation of a Group of Ministers (GoM). This GoM, chaired by the Union Minister of State for Finance, has been tasked with exploring viable alternatives to the abolished GST compensation cess, which expired at the end of the mandated five-year term.
No Immediate GST Rate Cuts Likely, Says Finance Ministry; Awaiting GoM Report on Rate Rationalisation
In a separate reply in the Lok Sabha, the Finance Ministry ruled out any immediate reduction in GST rates, stating that the issue remains under the jurisdiction of the GST Council. The Ministry emphasized that no decision on rate cuts can be taken until the Council receives the final report from the Group of Ministers (GoM) on rate rationalisation.
The GoM was constituted during the 45th GST Council meeting on September 17, 2021, but has yet to submit its recommendations. Minister of State for Finance, Pankaj Chaudhary, noted that the GST rates are set based on the consensus of the Council, a constitutional body comprising representatives from the Centre and all States/UTs.
Without the GoM's final inputs, the Minister said, any discussion on proposed GST rate cuts or timelines "does not arise."
The twin updates come amid increasing public discourse around inflation and tax relief, but the Centre has maintained that structural changes to the GST framework must be based on detailed analysis and collective decision-making through the Council.
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