Opposition-ruled states to demand compensation for revenue loss from tax slab rationalization
Opposition-ruled states will demand firm assurances from the Centre on compensation for revenue losses arising from the rationalization of goods and services tax slabs at the 56th GST Council meeting, before backing the proposed indirect tax reforms.
“It is the responsibility of the central government to cover for the losses of the state government on account of GST slab rationalization,” said Jharkhand’s finance minister Radha Krishna Kishore, warning that the state would face an estimated revenue loss of nearly Rs.2,000 crore because of the proposed reforms.
“We will approve their agenda if they compensate for the loss; otherwise, we will not. The state will suffer if compensation is not given,” he added while speaking to the media after a meeting of opposition state ministers on Wednesday morning.
He said while he did not anticipate a vote on the matter, the Centre must recognize that “in a federal country and a parliamentary democracy, compensating states for calculated losses is a matter of duty”.
The finance ministers of opposition-ruled states—Kerala, Tamil Nadu, Telangana, Karnataka, Punjab, Himachal Pradesh, West Bengal, and Jharkhand—met in New Delhi to devise a strategy ahead of the meeting, as the Narendra Modi-led National Democratic Alliance (NDA) is preparing to push another set of changes in the indirect tax structure.
The meeting was organized by Tamil Nadu finance minister Thangam Thennarasu.
The Centre is expected to present its strategy, but with states signalling tough bargaining positions, negotiations are likely to test the balance of fiscal federalism that underpins India’s GST framework.
