The GST reform is just a full announcement. It will be decided in the meeting to be held on 3 and 4 September. The announcement has been made by the Prime Minister of the country, Narendra Modi, then it is sure to get the green signal in the council meeting, but there are 8 states of the opposition of the country, which can admit their legs. Along with this, you can also put your demand in the meeting of GST Council. In fact, the opposition -ruled states say that the proposal to change the GST rate of the Center can cause a loss of revenue ranging from about Rs 1.5 crore to Rs 2 lakh crore. In such a situation, these states demanded the center to compensate for themselves. Let us also tell you what is the whole matter?
In the case of GST Reform, Finance Ministers of Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal-decided to present their proposal in the next meeting of GST Council on September 3-to-four. Their proposal to rationalize rates and balance revenue neutrality suggests to impose additional fees on the goods of harm and luxury besides the proposed 40 per cent rate to maintain the existing tax load. Opposition ruled states demanded that income from this fee should be distributed among the states.
States will suffer loss of revenue
After the meeting of these eight states, Karnataka Finance Minister Krishna Baye Gowda informed reporters that each state is expected to reduce its existing Goods and Services Tax (GST) revenue by 15-20 percent. Byre Gowda said that a 20 per cent decrease in GST revenue will severely destabilize the fiscal structure of state governments across the country. He said that states should be compensated for five years till the revenue is stable. The minister said that when GST was implemented, the revenue neutral rate (RNR) was 14.4 percent.
Later, after rationalizing the tax rates, the net rate of taxation decreased to 11 percent. The current proposal to reduce the GST rates of the Center and cut the slab will reduce the net rate of taxation to 10 percent. Byre Gowda said that the revenue interests of the states should be protected. If there is serious loss to the revenue of the state government, then people will be affected, development works will be affected and insufficient revenue will also damage the autonomy of the state.
Compensation demand
The Center has proposed that GST should be made a two -level tax structure with five percent and 18 percent rate. Apart from this, a rate of 40 percent has been proposed for a few selected items with harm and luxury. Himachal Pradesh Technical Education Minister Rajesh Dharmani said that we agree with the proposal to rationalize the rates, but we should also get compensation. Punjab Finance Minister Harpal Singh Cheema also demanded that a system should be set up to find out the profiteering so that the benefits of raising the rates can reach the common man. These states demanded that the base year 2024-25 be fixed for calculating revenue protection.
Telangana will lose 7 thousand crores
Telangana Deputy CM Bhatti Vikramark said that Telangana is estimated to lose Rs 7,000 crore annually by raising the proposed GST rates. He requested the Center to make proper compensation to the states of the possible damage caused by new tax measures. Kerala Finance Minister KN Balgopal said that the rates should be rational, but the revenue of the states will have to be protected and the common man should get the benefit. Tamil Nadu Finance Minister Thangam Thenarasu said that all states should be compensated for the possible damage caused by the process of rationalization of rates. Revenue of states should be protected.