Homeeconomy News

    BJP ruled states join Opposition in demanding GST compensation period extension as July 1 deadline approaches

    BJP ruled states join Opposition in demanding GST compensation period extension as July 1 deadline approaches

    BJP ruled states join Opposition in demanding GST compensation period extension as July 1 deadline approaches
    Profile image

    By CNBCTV18.com  IST (Updated)

    Mini

    States like Uttarakhand and Pudduchery, both ruled by Bhartiya Janta Party, have said that they will appeal to Finance Minister Nirmala Sitharaman for relief and seek an extension in the GST compensation period deadline which as of now is on July 1.

    On the second day of the GST Council meeting in Chandigarh, various states, including BJP-ruled ones, have sought an extension in the compensation period deadline which as of now is on July 1.
    States like Uttarakhand and Pudduchery, both ruled by Bhartiya Janta Party, have said that they will appeal to Finance Minister Nirmala Sitharaman for relief as their budgets are severely getting hurt.
    Speaking on the sidelines of the meeting, Premchand Aggarwal, Finance Minister, Uttarakhand, told the media, "We will demand centre to help us fight current revenue loss. We are facing a loss of Rs 5,000 crore per year and it is for the centre to decide on compensation. Our demand is to either extend the compensation or help us with these funds in any other way or financial support."
    Jagdish Devda, the finance minister of Madhya Pradesh also said that his state is looking at alternative revenue generation avenues. The Puducherry FM also echoed a similar demand.
    The Opposition-ruled states have been asking for an extension of five years. The states have also cited a recent Supreme Court ruling that decisions made by the Council are not binding and states need not stick to them. The ruling by the court has been seen by some as states having powers to determine taxation.
    Chhattisgarh Finance Minister TS Singh Deo said the present formula for equally splitting revenues from the GST between the Centre and states should be changed, with a larger share of 70-80 percent being given to states.
    Kerala Finance Minister KN Balagopal said the GST compensation mechanism for states should be extended to make good the revenue loss.
    In order to meet the resource gap of the states due to the short release of compensation, the Centre borrowed Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 as back-to-back loans to meet a part of the shortfall in cess collection.
    As per data on revenue growth collated for the Council meeting, only five out of 31 states/UTs, Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim, registered a revenue growth higher than the protected revenue rate for states under the GST in 2021-22.
    Puducherry, Punjab, Uttarakhand, and Himachal Pradesh have recorded the highest revenue gap between the protected revenue and post-settlement gross state GST revenue in 2021-22.
    As per a Reserve Bank study, the weighted average tax rate under the GST has declined from 14.4 per cent at the time of its launch to 11.6 per cent in September 2019. In the letter to Sitharaman, Deo said Chhattisgarh had suffered a revenue loss of Rs 4,127 crore in the last fiscal, Rs 3,620 crore in 2020-21, Rs 3,176 crore in 2019-20 and Rs 2,786 crore in 2018-19.
    (With PTI inputs)
    arrow down

      Market Movers

      View All
      CompanyPriceChng%Chng