Baghel for extending GST compensation by 10 years

Chhattisgarh Chief Minister Bhupesh Baghel on Thursday again urged Prime Minister Narendra Modi to extend the Goods and Services Tax (GST) compensation grant to next 10 years. Baghel had earlier too written to the Prime Minister.

The latest letter states the Central government should make an alternative permanent arrangement for compensation of revenue to the producing states at the earliest, an official communication said.

The Chief Minister pointed out that states like Chhattisgarh, with the discontinuation of GST compensation grant, will suffer a huge economic loss.

“Being a producing state, our contribution in the development of the country’s economy is much higher than those states deriving benefits of the GST tax system due to higher consumption of goods and services. If GST compensation is discontinued beyond June 2022, Chhattisgarh is likely to face a revenue loss of nearly Rs 5,000 crore in upcoming years.

“Many other states are also facing a similar situation of revenue shortfall. The shortfall in funds will directly impact the ongoing public welfare and development works,” he stated.

Citing the pre-budget consultation meetings for 2022-23 chaired by the Union Finance Minister with Chief Ministers and Finance Ministers, he said many states including Chhattisgarh had requested extension of GST compensation grant.

These states were awaiting a positive decision from the Central government, he said.

The GST tax system implementation has limited the autonomy of states in shaping tax policies. There is not much scope for revenue-related potential in the tax revenue other than commercial tax.

After Covid-19 pandemic had an adverse impact on the state’s economy, he said the compensation grant for next 10 years will assist in its recovery.