Explainer: How GST relief has states on edge
To cover revenue losses, 8 states have sought a new mechanism somewhat similar to compensation cess
Updated At : 06:19 AM Sep 14, 2025 IST
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WITH the Goods and Services Tax (GST) regime set for a sweeping overhaul effective September 22, negotiating the fiscal impact of the customer-centric ‘GST 2.0’ reforms poses a challenge for the states. Several voices have expressed concerns about the short-term revenue losses that could strain welfare budgets. Post the elimination of GST slabs of 12 and 28 per cent, customers will have a streamlined structure of just two primary rates — 5 and 18 per cent. The changes, approved unanimously by the GST Council in its 56th meeting on September 3, are aimed at easing the tax burden on everyday essentials.
