The government is mulling ways to compensate states for the widening goods and services tax (GST) shortfall, which include borrowing from the market and extending the cess repayment period further. Raising GST rates or rationalisation of tax slabs may be discussed by the GST Council in the next meeting to be scheduled early next month.

Compensating states has become tough with dwindling cess collection in the compensation fund amid a sharp fall in revenue due to the coronavirus pandemic. Compensation cess is levied on luxury and sin items such as aerated drinks, ...