Chhattisgarh CM exhorts other states to put pressure on Centre over decision to discontinue GST compensation

Chhattisgarh Chief Minister Bhupesh Baghel on Sunday wrote to the chief ministers of 17 other states requesting them to put pressure on the Centre so that it revokes its decision to discontinue paying GST compensation to the states.

According to a statement released by the state government, Baghel wrote a letter to his counterparts in Delhi, Odisha, Madhya Pradesh, Uttar Pradesh, Gujarat, Maharashtra, Jharkhand, Rajasthan, Punjab, Bihar, West Bengal, Haryana, Andhra Pradesh, Tamil Nadu, Telangana, Karnataka and Kerala.

“After the central government’s decision to stop paying GST compensation after June 2022, CM wrote to the 17 states elaborating the losses faced by the states due to this decision,” a statement from the Chhattisgarh government read.

In his letter, Baghel recounted that several states had raised concerns over the June deadline of stopping GST compensation at a meeting with the Union finance minister on December 29, 2021. “States had demanded an extension of at least five years,” he wrote.

Claiming that producer states would face substantial financial loss, he added that Chhattisgarh alone would face a loss of Rs 5,000 crore in the upcoming financial year if the GST compensation were to be discontinued.

“After the introduction of the GST regime, states’ autonomy on tax policy has significantly reduced. Also, in addition to commercial tax, states do not have a lot of options to augment revenue in other items of tax revenue. Therefore, to recover from the adverse impact of Covid-19 on the economy and till the time actual benefits of the GST regime are realized, states with similar interests should together request the Central Government to continue the current mechanism of compensation for GST shortfall for at least the next 5 years or devise an alternate temporary mechanism to compensate for shortfall in revenue for manufacturing states,” Baghel wrote in his letter.

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