A balanced approach to goods and services tax (GST) rate rationalisation is needed with an emphasis on revenue protection for states and ensuring that benefits reach consumers rather than companies, said Finance Ministers of several opposition states after a key meeting on Friday, August 29. The eight states included Jharkhand, Kerala, Himachal Pradesh, Karnataka, Telangana, Tamil Nadu, Punjab, and West Bengal.
Highlighting the gravity of the situation, Jharkhand’s Finance Minister Radha Krishan Kishore said, “GST was not rational at its introduction in 2017. Our manufacturing state is suffering. Even BJP-ruled states want their revenues protected but are hesitant to voice it openly.”
Echoing the sentiment, Kerala’s Finance Minister KN Balagopal said, “We are speaking for almost all states. In the eight years since GST, states have collectively lost significant revenues—around ₹54,000 crore less than under the previous VAT system.”
Rajesh Dharmani, Himachal Pradesh’s Minister for Technical Education, highlighted the reduced tax growth post-GST, “Before GST, our tax growth was 16%; now it’s just 6-7%. Rationalisation should not lead to profiteering by vested interests.”
Tamil Nadu’s Finance Minister Thiru Thangam Thennarasu stated, “We support rate rationalisation, but compensation for losses should be extended to all states. Benefits must reach the common man, not just companies.”
Highlighting the cumulative impact, Punjab FM Harpal Singh Cheema said, “In eight years, there have been 27 exemptions and 15 rate cuts. Punjab alone has lost ₹1.11 lakh crore in revenues. This is hurting welfare and infrastructure development.”
The ministers proposed an additional levy within GST, specifically targeting sin goods, as a potential revenue stabiliser. Karnataka’s Revenue Minister Krishna Byre Gowda explained, “The levy can replace the cess, applied on sin items, bridging the gap between 40% and current rates for five years or until revenues stabilise.”
States stressed the need for cooperative federalism and fiscal autonomy. “Without fiscal strength, states cannot fulfill their welfare responsibilities,” they said.
The group also raised concerns about the lack of transparent data from the Centre on revenue losses due to rationalisation and urged a formal mechanism under the GST Council to protect states’ fiscal health while ensuring that rationalisation benefits genuinely reach the people.
Source from: https://www.cnbctv18.com/economy/states-demand-revenue-protection-amid-gst-rate-rationalisation-debate-19661204.htm
