Opposition-ruled states meet ahead of GST Council, seek compensation to nod reform agenda
GST
Dated:- 3-9-2025
PTI
New Delhi, Sep 3 (PTI) Finance ministers of opposition-ruled states on Wednesday met ahead of the crucial GST Council meeting, and decided to seek compensation for revenue loss incurred by all states following the implementation of GST rate rejig.
Eight opposition-ruled states Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal had met last week to decide on how their revenues could be protected once the 12 and 28 per cent slabs are removed.
Jharkhand Finance Minister Radha Krishna Kishore said his state will suffer a Rs 2,000 crore revenue loss if the Centre's GST refo
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and comprising ministers from all states, will, over the next two days, discuss the Centre's 'next-gen' GST reform proposal of having just two tax rates of 5 and 18 per cent by moving products from the current 12 and 28 per cent slab to lower rates.
A special 40 per cent rate has been proposed to be levied on a select few items. A 4-tier GST structure of 5, 12, 18 and 28 per cent was implemented from July 1, 2017, when the Centre and states agreed to subsume most of their taxes, like excise duty and VAT, into one uniform tax.
A compensation cess in the range of 1 to 290 per cent is levied on luxury and demerit goods to create a revenue pool for compensating states for the loss of revenue occurring from the exercise. The compensation me
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a compensation cess, may see differential rates, with entry-level cars being charged 18 per cent rate, while SUVs and luxury ones being put in the special 40 per cent rate.
The special 40 per cent rate will also be for other demerit goods like tobacco, pan masala and cigarettes. There could also be an additional tax on top of this rate for this category.
Opposition states, like West Bengal, have demanded that any levy on top of the 40 per cent rate should exclusively be for sharing with states to make up for their revenue losses.
The compensation cess mechanism was initially put in place for a 5-year period till June 30, 2022, to make up for the revenue loss suffered by states on account of GST implementation.
The levy of compensati
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