Ans. GST rate implies the rate at which GST is applicable on goods and services. It should be noted that GST is charged at each step of value addition and depends on the destination of consumption. For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is accredited to the state of consumption (state B) and not to the state of production (state A).
As a result manufacturing states may suffer a revenue loss owing to the consumption-based nature of GST. Thus, GST Compensation Cess or GST Cess was introduced on certain goods to compensate for the possible revenue losses suffered by such manufacturing states. However, it will be levied only for the first 5 years of GST regime, that is from July 1st, 2017 to July 1st, 2022.