GST compensation period for TN seems unlikely to be extended

Finance Minister Palanivel Thiaga Rajan said on Tuesday that there is no indication from the Union government that the GST compensation period will be extended beyond June, as demanded by state governments, and that he would write to the Union Finance Ministry and the GST Council to seek clarification on rumours about possible tax rate hikes.

During zero hour, the minister was responding to questions from PMK floor leader GK Mani, KDMK’s ER Eswaran, and TVK’s T Velmurugan. “The Centre and the council have recognised that GST revenue has been low, and this needs to be corrected. There have been rumours regarding a prospective increase in GST rates; I will seek a clear response to put these rumours to rest,” the minister stated. States would incur revenue losses of thousands of crores of rupees if the GST compensation period is not extended, he warned.

“We could not achieve the expected tax growth after five years of implementing GST.” Furthermore, the predicted growth from establishing ‘One Nation, One Taxation’ did not occur. Some may point the finger at the epidemic. “But the issue was evident even before the pandemic,” the minister remarked. Rajan also noted that two committees were created following the GST Council in Lucknow to address challenges faced by the states.

“One is a standing committee for system reformation, and I am a member of it.” The second was the rate rationalisation committee, whose goal was to recommend steps to raise the effective tax rate from 11.4 percent to 15 percent. The committee was asked to present its report to the GST Council within three months, but this has not occurred.

Source: Link