Extend Period for GST Compensation to States beyond 2022: Karnataka CM to Nirmala Sitharaman

Karnataka Chief Minister Basavaraj Bommai asked the  Union government on Thursday to extend the goods and services tax (GST) Compensation period to states by three years. Bomai met with Union Minister of Finance Nirmala Sitharaman in New Delhi on Thursday. He said that he discussed extending the GST compensation period to the states after 2022 and the GST Dues to be paid in installments. Bommai said that the GST collection has not stabilized due to Covid19, and it will be helpful if the compensation period is extended.

The Compensation loan only supports states in the current fiscal year, but the tax impact of the pandemic will continue for several years, he said. A statement issued by the Chief Minister’s Office (CMO) stated that Bommai also asked Sitharaman to increase funding for the state under the 15th Finance Committee.

The 15th Finance Committee recommended in its final report 2021-26 that Karnataka’s participation in fiscal decentralization should be reduced from 4.71% recommended by the 14th Finance Committee to 3.647%, it said. Bommai urged the Union minister to reconsider the standards for sharing resources between states.

Bommai also stated that the center has not considered the recommendation of the 15th Finance Committee to provide Karnataka with a specific state grant of Rs 6,000 crore for the general improvement of the water bodies in Bangalore and the outer ring road project. .

Bangalore is the business and IT capital of the country and has made a significant contribution to the national economy. Improving Bangalore’s infrastructure can help attract more investment, Bommai said, urging the center to provide funding for the city’s development.