New Delhi: Amidst the decline in the revenue and GST collection of the state in the wake of the COVID-19 crisis, Karnataka Chief Minister Basavaraj S Bommai Demanded to extend the period from the Center on Thursday GST Compensation Term to the states from 2022 onwards, for three more years. After meeting with Union Finance Minister Nirmala Sitharaman, Bommai said that they also discussed GST (Goods and Services Tax) Rs 11,000 crore to be paid in installments to Karnataka.
“The arrears which were to be paid from July 2022 are being advanced through installment from this year. Simultaneously, I discussed extending GST compensation to states beyond 2022,” he told reporters after the meeting. In the meeting, the CM told Sitharaman that state GST collections are not yet stable in view of the COVID-19 crisis. and will be more helpful in this ongoing revenue crunch if the GST compensation to the states is extended for three more years.
Karnataka is one of the best performing states since the implementation of GST in 2017. “However, since the last financial year the COVID crisis has brought down the revenue collection of the state including the GST collection,” he said in a representation to the FM. The Center had provided GST compensation loan for the financial year 2020-21 keeping in view the revenue crunch in all the states and it has been extended for the current financial year as well.
“Though the compensation loan will support the states only for the current financial year, the impact made by COVID on revenue collection will be carried forward for the next few years as well. Hence, the GST revenue collection will take time to reach the protected amount,” he said. The CM insisted, “I request you to reconsider the state’s request to increase the GST compensation.”
In the meeting, Bommai – who is also a member of the GST Council – also flagged that the 15th Finance Commission in its final report for 2021-26 reduced Karnataka’s share in tax transfers to 3.647 per cent from 4.71 per cent. recommended to do. 14th Finance Commission Recommendation Since Karnataka has seen the biggest cut of 23 per cent due to reduction in transfer share, he requested the FM to reconsider the norms for horizontal transfer for sharing of resources among states.
The CM also informed that the state government has submitted an additional memorandum to the commission in this regard. But the commission did not consider the request of the state. “It has affected Karnataka badly as compared to other southern states,” he said.
The CM also brought to the notice of the FM that the Central Government has not considered the recommendation of the 15th Finance Commission to give a state specific grant of Rs 6,000 crore to Karnataka for overall improvement of water bodies in Bengaluru and Peripheral Ring Road. “… the Government of India in its explanatory memorandum has not considered the recommendation of the Finance Commission. This will be a setback for the State, which is already under stress due to drastic cuts in tax devolution.”
Bengaluru, the country’s IT and start-up hub, is a major contributor to the services sector of the national economy. And the city has the potential to attract more investments if critical infrastructure improvements are made, he said. In addition, NABARD’s assistance to various groups including SC and ST women, self-help groups and infrastructure objectives were also discussed in detail with the Finance Minister, he said.
Bommai will also meet Union Health Minister Mansukh Mandaviya and Commerce and Food Minister Piyush Goyal on the second day of his Delhi visit.
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