Kerala and Jammu and Kashmir, the two states that have not yet cleared the state GST laws, will lose out on the compensation package of the Central government if they do not accept the unified indirect tax regime.
"All GST Council decisions have been taken through consensus. SGST has been approved by all states barring J&K and Kerala. Kerala will consider it this week. Jammu and Kashmir is going through the process. It will have to do it separately as the State has different statutes," Finance Minister Arun Jaitley said.
He added that consumers and traders both would suffer if states kept out of the GST. "They will not get input tax credit and consumers will get more expensive products than the rest of the country. There will be another impact on the compensation to states. Those who don't join don't get that benefit of revenue loss compensation for 5 years," Jaitley said.
Citing GST as a historic reform, he said, "I think that GST is a reform step for the better. All reforms in their initial phase have an impact and are seen as disruptive and in the long run are seen as result-yielding reforms. When you go for reforms, you should never blink. Because when you blink, you get derailed," he added.