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Karnataka to step up pressure on Centre to continue GST relief

  • 24 Sep 2021
  • Garima
  • 358

Karnataka will renew its efforts to convince the Centre to continue granting compensation for the loss of revenue due to implementation of Goods and Services Tax (GST) beyond June 2022 even as the state’s tax collection is slowly emerging out of the Covid-hit slowdown.

Finance department officials said Karnataka has joined other states seeking continuation of GST compensation at least for two more years. Chief minister Basavaraj Bommai, who holds the finance portfolio and represents the state in the GST Council, will pursue the matter with the Centre. “We have already sought for it and further correspondence with the Centre will be done,” said ISN Prasad, additional chief secretary, finance department.

While he had authorised commercial commissioner C Shikha to represent Karnataka in the council meeting last Friday, Bommai had sent a letter to the Union finance minister and council chairman Nirmala Sitharaman requesting her to continue the relief tenure.

The council, however, deferred the decision. Sithraman said the regime of paying general compensation will end in June next year and that cess levied on luxury goods will be used only to repay the borrowings made in 2020-21 and 2021-22 to compensate states for revenue losses caused by Covid-19. Levying of cess will continue till 2026.

“The outcome of the council meeting is a little disheartening since the Centre’s refusal to commit to continuation of compensation comes at a time when states are still uncertain about the revenue scenario from next year. However, we are given to understand that the Centre has only deferred its decision and we hope it will oblige,” said BT Manohar, member of Karnataka State GST Advisory Council.

Officials said Bommai will raise the issue in the next GST Council meeting expected in the last week of October, apart from requesting Prime Minister Narendra Modi and Sitharaman personally during his next New Delhi visit.

With the slowdown still persisting, revenue loss is expected to continue through the economic recovery in Karnataka is quicker than expected. The state received Rs 18,990 crore general compensation in 2020-21 apart from Rs 12,407 crore through special window of borrowing for compensating loss due to the pandemic.

While the state claims Rs 2,500 crore per month on average, the Centre has released Rs 8,542 crore so far, which includes both general compensation and that for Covid losses for this year, and Rs 11,059 crore is due. The commercial tax department has collected Rs 2,351 crore GST and Rs 1,794 crore sales tax levied on petrol and diesel in September till date, while the state has got Rs 2,000 crore compensation in the month.

“The money coming in the form of compensation is quite substantial and we cannot afford to forgo it. The CM will take it up with the Centre…,” said an official.

Source- https://timesofindia.indiatimes.com/city/bengaluru/state-to-step-up-pressure-on-centre-to-continue-gst-relief/articleshow/86465283.cms

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