Revenue loss a worry: Oppn-ruled states

State governments and chief ministers cutting across party lines on Thursday welcomed the new goods and services tax (GST) rates as people-friendly.

- Archis Mohan & Press Trust of India

However, some INDIA bloc-ruled states flagged a potential revenue loss, demanded greater devolution to the states by the 16th Finance Commission, and also asked for extending compensation to the states by another five years to protect their revenues.

The Tamil Nadu government hailed the GST rate rationalisation but expressed concern over state revenues. State Finance Minister Thangam Thennarasu suggested either continuing the present dispensation of cess provision through a constitutional amendment or increasing the bound rate of tax only for sin (tobacco products, among others) and luxury goods through a GST Act amendment.

Kerala Finance Minister K N Balagopal said the southern state could face an annual revenue loss of ₹8,000 crore-10,000 crore due to rationalisation. Balagopal said the Left Democratic Front government supported the rate cuts, which would reduce prices, but the central government should ensure that the benefits were passed on to the consumer. The minister said that compensation should be provided for the states but the issue was not taken up seriously during the GST Council meeting.