On Thursday, Chattisgarh Chief Minister Bhupesh Bhagel writes to Prime Minister Narendra Modi seeking an extension of the ongoing compensation mechanism of Goods and Service Tax (GST) for 10 more years.
In a letter to PM Modi, Baghel raised his concern over the discontinuation of the GST compensation grant. He said, “it is a huge economic loss for producing states like Chattisgarh.”
He further said that the Central Government should make an alternative permanent arrangement for compensation of revenue to the producing states at the earliest as the contribution of Chattisgarh to the economy of the country is comparatively more than that of the states which benefitted under the GST system by consuming goods and services.
“If the GST compensation is discontinued after June 2022, then Chattisgarh is expected to face a revenue loss of nearly Rs 5,000 crore in the future. Similarly, others states would also have reduced revenue receipts in the next financial year. Due to this, it would be difficult to arrange for a shortfall in funds for the ongoing public welfare and development works in the state,” he added.
The Chief Minister noted that after the rollout of the GST tax system states have less power in shaping tax policies and there is not much revenue-related potential in the tax revenue other than commercial tax. He also urged the Central government to devise an alternate permanent mechanism to compensate for the shortfall in revenue for manufacturing states.
“Although, every effort is being made by us towards revenue generation, however, the present compensation grant system should be continued for the next 10 years to recover from the adverse impact of COVID-19 on the economy of states and till the time actual benefits of the GST tax system are realised,” he added.
The Chief Minister remained hopeful that the PM Modi will agree with the concerns of states and will act in the spirit of cooperative federalism to resolve the important issue involving the interests of all states.
(WITH INPUTS FROM IANS)