Karnataka has decided to seek extension of the GST compensation system for States by the Centre, which was introduced five years ago and ends in June this year.
Announcing this in the Legislative Assembly on Monday, Chief Minister Basavaraj Bommai said he would visit Delhi soon after the ongoing legislature session to request the Central authorities, including Union Finance Minister Nirmala Sitharaman in this regard.
“I have already made the request at the GST Council as well as with Ms. Sitharaman. However, I will again take up the issue now,” he said. He added that it was an unanimous view of all the States, irrespective of which party was in power, that GST compensation period should continue.
He explained that the Centre that introduced GST in 2017 had introduced a system of compensating the states for the loss in revenues on account of new tax regime for five years till June 2022 to help stabilise tax collection system. Meanwhile, the Centre had also commenced a system of helping States to borrow to make up for reduction in revenues on account of GST regime, he pointed out.
However, the pandemic had come in the way of ensuring stability as it had affected State’s finances and reduced the revenues, he noted. He expressed confidence that the Centre would come out with some alternative mechanism to support the States. Such a support was necessary in a federal set up, he added.
Earlier, Leader of the Opposition Siddaramaiah said that Karnataka had lost revenues to the tune of ₹2,96,655 crore so far since 2016 due to the introduction of GST regime and demonetisation.
