The rationalisation of GST rates in the middle of the financial year caused unforeseen consequences for the state budget, Karnataka Chief Minister Siddaramaiah said Monday. He was commenting on the GST reforms introduced in September last year when GST slabs were reduced from four to two.
“The GST rationalisation measure will cost the state Rs 12,000 crore to Rs 15,000 crore annually,” he told the Legislative Assembly while responding to the Motion of Thanks to the Governor’s address.
The measure introduced in the middle of the year had repercussions on the estimates Karnataka made on GST revenue collection for the 2025-26 fiscal, as it caused losses in revenue. “This loss is a loss to the state, a loss to the people of the state,” the CM said.
The remarks were challenged by the Opposition benches, with BJP MLA Araga Jnanendra arguing that rationalisation only helped people. Siddaramaiah countered, asking whether the four slabs in existence previously were meant to harm the public. “What about the state budget (estimates) if rationalisation is announced in the middle of the year?” he asked, accusing the Union government of reducing GST slabs in view of the Bihar elections.
Such aspects were highlighted in the Governor’s speech, “which he did not read,” the CM said. By not reading the speech prepared by the government during the joint session, the Governor has violated established Constitutional norms, he added.
On the 16th Finance Commission, he stated that the Commission, too, failed to provide justice to Karnataka’s aspirations. The state could have got some justice if the allocation under the 16th Commission was higher than the 4.7 per cent allotted under the 14th Finance Commission. “But, the allocation under 16th FC is only 4.131 per cent (of the divisible pool of taxes),” he added.
