Chhattisgarh chief minister Bhupesh Baghel has written a letter to Prime Minister Narendra Modi, on Thursday, seeking extension of the Goods and Services Tax (GST) compensation grant.
The CM urged the Centre to continue the present system of GST compensation for the next 10 years and stated that the Central government should make an alternative permanent arrangement for compensation of revenue to the producing states at the earliest.
“Being a manufacturing state, our contribution in the development of the country’s economy is much more than those states which have benefited in the GST tax system due to higher consumption of goods and services. If the GST compensation is not continued beyond June 2022, then Chhattisgarh is likely to face a revenue loss of nearly ₹5,000 crore in the upcoming year. Similarly, many other states will also face revenue shortfall in the coming year. Due to this, it would be difficult to arrange for a shortfall in funds for the ongoing public welfare and development work in the state,” Baghel said in his letter.
In his communication, Baghel also referred to the pre-budget consultation meetings for Budget 2022-23 chaired by the Union Finance Minister, with Chief Ministers, which was held in New Delhi in December 2021.
The Chhattisgarh CM has said that after the implementation of the GST tax system, the autonomy of states in shaping tax policies has become very limited and there is not much revenue-related potential in tax revenue other than commercial tax.
{{/usCountry}}The Chhattisgarh CM has said that after the implementation of the GST tax system, the autonomy of states in shaping tax policies has become very limited and there is not much revenue-related potential in tax revenue other than commercial tax.
{{/usCountry}}“Although, every effort is being made by us towards revenue generation, the present compensation grant system should be continued for the next 10 years to recover from the adverse impact of Covid-19 on the economy of states and till the time actual benefits of the GST tax system are realized,” Baghel said.
He has also appealed to the Central government to devise an alternate permanent mechanism to compensate for shortfall in revenue for manufacturing states.