Bhatti demands safeguards to south states in GST rejig

Hyderabad: Deputy Chief Minister Mallu Bhatti Vikramarka on Thursday demanded the Union government to safeguard the interests of the southern states in the proposed GST rate rationalization.

Participating in the Group of Ministers (GoM) meeting on GST rate rationalization in New Delhi, the Deputy CM welcomed the proposal of rate rationalization and reduction in tax burden. He, however, said that at the same time, it must be balanced by ensuring that the revenues of the states are protected.

Otherwise, the welfare schemes meant for poor people and middle class and infrastructure projects will suffer, he added.

Bhatti further said that southern states like Telangana, Karnataka, Tamil Nadu were getting a far lower share in the form of devolution than their contribution to the national revenues. The minister pointed out that when GST was introduced, tax revenues of states were growing at the rate of 14 per cent and therefore the Centre assured an annual growth of 14 per cent in the states. To compensate losses if any, GST compensation was introduced for a period of five years to stabilise the tax revenue growth rate. However, the tax revenue growth had not stabilized at 14 per cent. At present, the states are clocking an upswing of eight to nine per cent only, he added.

To protect the interests of the states, he proposed that the present compensation cess may be continued, and the amount collected may be given fully to the respective states. Alternatively, while dispensing with compensation cess, the GST rates on luxury goods may be increased to their present levels and the additional amount collected may be given to the respective states, he said. “This will reduce the tax burden on ordinary taxpayers while enabling the states to continue with the welfare of poorer sections and middle class as well as development and infrastructure projects”, he said.