Chhattisgarh CM writes to 17 states, seeks expansion of GST compensation to 10 years

Chhattisgarh Chief Minister Bhupesh Baghel has written to chief ministers of 17 states, seeking their support in a bid to convince the Centre to extend the period of compensation mechanism under the GST for five years after June 2022.

The Congress leader on Sunday addressed the letter to the CMs of Maharashtra, Jharkhand, Rajasthan, Punjab, West Bengal, Odisha, Andhra Pradesh, Telangana, Tamil Nadu, Kerala, Delhi, Bihar (where the NDA is in power), and also to five BJP ruled states which include Madhya Pradesh, Uttar Pradesh, Gujarat, Karnataka and Haryana.

“The Centre 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 said in a tweet on Sunday.

“I have written a letter to the Chief Ministers of 17 states urging them that a joint request should be made to the Centre to extend the GST compensation mechanism,” Baghel said in the tweet.

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

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“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. If the GST compensation is not continued beyond June 2022, then Chhattisgarh is expected to face a revenue loss of approximately ₹5,000 crore in the upcoming financial year,” Baghel 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 said to the CMs. He further said that after the introduction of the GST regime, the autonomy of states on tax policy has significantly reduced.

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“Therefore, to recover from the adverse impact of COVID-l9 on the economy and till the time actual benefits of the GST regime are realised, 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,” Baghel added.

(With inputs from Agencies)