Raipur 28-03-2022 ,In regard to Central Government’s decision to discontinue the GST Compensation after June 2022, Chief Minister Mr. Bhupesh Baghel, has written a letter to the Chief Minister of 17 states to discuss this issue. Through this letter, he has discussed the losses that will be faced by all the states due to this decision taken by the Central Government. Mr. Baghel has sent letters to the Chief Ministers of Orissa, Madhya Pradesh, Uttar Pradesh, Gujarat, Jharkhand, Rajasthan, Punjab, Bihar, West Bengal, Haryana, Andhra Pradesh, Hyderabad, Tamil Nadu, Karnataka, Kerala, Telangana and Delhi. In this letter, Mr. Baghel has requested the Chief Ministers of 17 states to make a joint request to the Central Government to continue the GST compensation for ten years, so that the revenue of the states can be saved from huge loss, otherwise the centre should create an alternative arrangement.
Chief Minister Mr. Baghel, in this letter has talked about three key points; First point being that in the pre-budget meeting under the chairmanship of the Union Finance Minister on 29th December in New Delhi, Chief Ministers and state finance ministers present in the meeting expressed deep concerns over the closure of GST Compensation after June 2022 and these state Chief Ministers and Finance ministers, hoping for a positive response from the central government
had requested to extend the GST compensation for five years in the meeting itself.
In the second key point, he discussed the issues that will be faced by manufacturing states like Chhattisgarh and Andhra Pradesh. He further said, these states will face huge financial losses if GST Compensation is discontinued. Chhattisgarh, being a manufacturing state, our contribution to the growth of the country’s economy is much higher than the consumer states which have benefited from the GST regime due to higher consumption of goods and services. He said If GST compensation is not continued beyond June 2022, Chhattisgarh may face huge revenue loss. There may be a loss of around Rs 5,000 crore in the coming financial year. Similarly, other states will also have less revenue receipts in the coming financial year. And this problem will make it very difficult for the states to arrange money for public interest works and development works.
In the third key point, Mr. Baghel has pointed out that after the introduction of the GST regime, the independence of the states on tax policy has been greatly reduced. Apart from commercial tax, the states are left with no option but to increase the revenue in other items of tax revenue. Therefore, in order to recover from the impact of COVID-19 on the state’s economy and get the due benefits of GST compensation, the states should request the central government to implement the continuation of this existing mechanism of compensation of GST, at least for the next 5 years. Chief Minister Mr. Bhupesh Baghel exuded confidence that the states would agree to his point of view and together would make a common request to the Center to agree on this issue.
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