New Delhi:
Several states have requested an extension of the GST compensation scheme for another five years and have also urged that the central government’s share of centrally sponsored schemes be increased as their revenues have been hit hard by the coronavirus pandemic.
In addition, several states signaled a higher tax rate on textile products from 1 January and demanded that the rate increase be postponed.
The issue was raised by states such as Gujarat, West Bengal, Delhi, Rajasthan and Tamil Nadu, who said they are not in favor of increasing the Goods and Services Tax (GST) on textiles to 12 percent, from 5%. per cent. currently, as of January 1, 2022.
Both issues were raised during the pre-budget meeting of Finance Minister Nirmala Sitharaman with her colleagues from the states.
Incidentally, the meeting of the GST council will take place on December 31, so tomorrow.
GST compensation to states for lost revenue due to the inclusion of local taxes such as VAT in the unified national Goods and Services Tax (GST) will expire in June next year.
There is a loss of income for the states due to the GST tax system, the center has not made any arrangements to compensate the state for the loss of income of about Rs 5,000 crore in the coming year, so the granting of the GST compensation should continue for the next five years after June 2022, said Chhattisgarh’s chief minister, Bhupesh Baghel.
“Many states have asked for this. We have also asked for an extension of the GST compensation. If it is not extended, the finances of many states will be in a bad state,” Delhi Deputy Prime Minister Manish Sisodia said. after meeting Mrs. Sitharaman.
Noting that Chhattisgarh has received less share of central taxes of Rs 13,089 crore in the Union budget over the past three years, Mr Baghel demanded that the share of central taxes be given in full to the state in the coming year.
He also demanded that Rs 4,140 crore, deposited at the center at a rate of Rs 294 per tonne on coal mining from coal block companies, be transferred to Chhattisgarh soon.
Rajasthan Education Minister Subhash Garg said extending the deadline for stopping compensation to 2026-27 is a valid requirement from states and the Center should consider it.
He also demanded a cut in import duties on gold and silver from 10 percent to 4 percent.
“Our main requirement is that the center’s share of the centrally sponsored program has gradually decreased and that the states’ share has increased. It used to be 90-10 and now it’s 50-50 or 60-40, our request is that it should go back to 90-10,” Garg said.
West Bengal also called for an extension of the GST compensation for another five years, citing two years of difficult time due to the coronavirus pandemic.
The coronavirus crisis was not expected when this was resolved, said Chandrima Bhattacharya, West Bengal Minister of Urban Development and Municipal Affairs. She also said states have also asked for the Union government’s share of the center-sponsored schemes to be increased.
With regard to government bonds, she said the additional loan window should be without any restrictions.
Tamil Nadu’s finance minister, Thiaga Rajan, said he has demanded an extension of the GST compensation scheme for at least two years due to the pandemic.
He also advocated increasing the center’s share of centrally sponsored programs.
On the higher VAT rate on textile products, Mr Sisodia said the move to increase the VAT on textiles from 5 percent to 12 percent is not people-friendly and should be withdrawn. If a common man buys clothes of Rs 1,000, he has to pay GST of Rs 120. “Delhi is not in favor of this,” he said.
Mr Sisodia is also the finance minister of Delhi.
Thiaga Rajan said: “It is a one item agenda (for tomorrow’s Council meeting). It is an agenda that many states have put forward. The agenda item says it was put forward by Gujarat, but I know that many states have brought it up… It should be stopped (moving to raise GST rate on textiles)”.