Leader of the Opposition Siddaramaiah on Thursday said Karnataka would lose revenue of ₹20,000 crore a year if the Centre discontinued payment of compensation under the Goods and Service Tax (GST) regime which commenced in 2017.
He criticised the GST Council decision to hike tax rates on various household commodities used by the common public.
Ends on June 30
Mr. Siddaramaiah, who has presented more than a dozen State Budgets, said that Opposition-ruled States and the Congress have been seeking continuation of compensation to States for revenue loss beyond the five-year period that ends this June 30. The GST Council, which met at Chandigarh has not taken any decision on the continuation of compensation to States. The 14% GST compensation to the States comes to an end on June 30.
He demanded the continuation of the provision of providing compensation for another five years, till 2027. Many States had suffered revenue loss owing to the pandemic for the last two years, he said. When the GST regime was rolled out in 2017, States were promised compensation for revenue loss till June 2022. The GST subsumed 17 Central and State taxes.
Chief Minister Basavaraj Bommai, who attended the 47th GST Council meeting in Chandigarh, did not push the demand for extending the compensation demand before Finance Minister Nirmala Sitharaman, who chaired the meeting, Mr. Siddaramaiah said. BJP Ministers did not raise their voice on loss incurred to States by denying compensation under GST, he alleged.
On quantum of taxes, he argued that when prices of commodities are increasing, the GST Council should have reduced taxes. “But the council has increased GST which will impact the common man,” the Congress leader said and questioned the necessity of reducing corporate tax from 30% to 22%.
‘Burden on people’
Citing instances of hike in taxes, Mr. Siddarmaiah said the GST on flour mills had been hiked from 12% to 18%, kilns from 5% to 12%, LED bulbs and inks from 12% to 18%, and on submarine pumps, fruits and milking machines from 12% to 15%. “Hike in taxes are both unscientific and a burden on the people,” Mr. Siddaramaiah claimed. New tax rates comes into effect from July 18.
The former Chief Minister said, “GST is an interference in the autonomy of States in a federal system. Imposing indirect taxes comes under the jurisdiction of the States.”
