States demand GST compensation extension for another 5 years

New Delhi: In view of the financial stress created by the outbreak of the pandemic, State governments, including Chhattisgarh, Kerala, Delhi and West Bengal on Thursday pressed for continuation of the GST compensation for another five-year period.

The demand for extension of the GST cess regime among others was made by several state finance ministers at a pre-budget consultation called by Union Finance Minister Nirmala Sitharaman here. Besides, many states also demanded raising the share of the Union government in the Centrally Sponsored Schemes (CSS).

Currently, the central government and state government share in some CSS is 60:40 ratio, while in others it is 75:25. GST compensation to states for revenue shortfall resulting from subsuming of local taxes such as Value Added Tax (VAT) in the uniform national tax, GST will end in June next year. There has been a loss of revenue to states due to the GST tax system, the Centre has not made arrangements to compensate the loss of revenue of about Rs 5,000 crore to states in the coming year, according to Chhattisgarh Chief Minister Bhupesh Baghel.

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