Support GST compensation extension demand, CM Baghel tells 17 states

Chhattisgarh Chief Minister Bhupesh Baghel has written to his counterparts in 17 states, including five ruled by the BJP and AAP-governed Delhi and Punjab, seeking their support to convince the Centre in extending the period of Goods and Services Tax (GST) compensation for five successive years after June 2022.

Baghel on Sunday wrote to the Chief Ministers of Maharashtra, Jharkhand, Rajasthan, Punjab, West Bengal, Odisha, Andhra Pradesh, Telangana, Tamil Nadu, Kerala and Delhi and BJP ruled Madhya Pradesh, Uttar Pradesh, Gujarat, Karnataka and Haryana as well as Bihar.

In a tweet on Sunday night, Baghel said: “The Union government has decided to stop the compensation given to states under GST after June 2022. The move will cause a huge loss of revenue to the manufacturing states. We had requested the Centre to continue with the GST compensation or make an alternate arrangement.”

Baghel added: “I have written to the Chief Ministers of 17 states urging them that a joint request should be made to the Centre to extend the GST compensation.”

Baghel said for manufacturing states, including Chhattisgarh, not receiving the GST compensation would be a big financial loss.

“Being manufacturing states, our contribution to the growth of the country’s economy is much higher than those states which have benefited from the GST regime due to higher consumption of goods and services,” he said.

If the GST compensation is not continued beyond June 2022, then Chhattisgarh is expected to face a revenue loss of approximately Rs 5,000 crore in the upcoming financial year, he said.

“Similarly, your state would also have reduced revenue receipts in the next financial year. It would become very difficult to arrange for a shortfall in funds for public welfare and development works,” Baghel told the other Chief Ministers.

He said that by the introduction of the GST, the autonomy of states on tax policy has significantly reduced.

“Therefore, to recover from the adverse impact of Covid-l9 on the economy and till the time actual benefits of the GST are realized, states with similar interests should jointly request the Union government to continue the current mechanism of compensation for at least next five years or devise an alternate temporary mechanism to compensate for the shortfall in revenue”, he added