Compensate Karnataka for GST rationalisation losses, share pan masala cess
Karnataka Chief Minister Siddaramaiah has written to Prime Minister Narendra Modi seeking compensation for losses incurred by the state after the recent GST rationalisation and to protest the Centre’s decision to impose a cess on pan masala despite the item falling under the Goods and Services Tax (GST) bracket with states eligible for a share of the tax.
“The states supported the rate reductions in the larger public interest of easing the burden on citizens and to stimulate economic growth. This was despite the strong apprehensions regarding the potential fiscal shock these measures could create to the states,” he has stated.
According to the Karnataka CM, data now confirms that apprehensions were well-founded and the gross GST collections for November 2025-26 had seen a two per cent decline, compared to a robust 9.3 per cent growth in November 2024.
“For the period from September to November 2025-26 (for the three months affected by rationalisation), the year-on-year growth in gross GST collections has slowed to 3.3 per cent, as against 9 per cent in the corresponding period of the previous year,” Siddaramaiah stated.
