Opposition-Ruled states seek continuation of GST shortfall compensation

Chandigarh: Amid concerns over revenue losses, states ruled by opposition parties have urged that either the revenue sharing mechanism under the GST regime be modified or the compensation period be extended by five years.

On July 1, 2017, the Goods and Services Tax (GST) was implemented, and until June 2022, states were guaranteed compensation for any revenue losses caused by the GST rollout. The states have also referenced a recent Supreme Court judgment that says decisions made by the Council are not binding and states are not required to follow them as the GST Council got started here on Tuesday. Some people have interpreted the court's decision as giving states the authority to control taxation.

Chhattisgarh Finance Minster Saran Singh Deo  said that the  current system for dividing GST revenue evenly between the Centre and states, should be altered to offer states a higher portion of 70–80%.

Likewise, Kerala Finance Minister K.N Balagopal said, the GST compensation mechanism for states should be expanded, to make up for the revenue loss.

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