Eight Opposition-ruled states back GST slab cut, seek safeguards for revenue and consumers

The states have also demanded that additional levies on ‘sin’ and luxury goods above 40% be fully transferred to them, pointing out that nearly 18% of the Centre’s revenue comes from cesses not shared with states.

New Delhi: Eight opposition-ruled states have extended their support to a reduction in the number of GST rate slabs and a cut in the rates for mass consumption items, Congress leader Jairam Ramesh said on Saturday.

At the same time, they have demanded a mechanism to ensure the benefits of the rate cuts get passed on to consumers, he said.

According to Ramesh, the eight opposition-ruled states have also demanded compensation to all states for a period of five years, with 2024-25 as the base year, since their revenues are bound to be adversely impacted by the rate cuts.

They have demanded additional levies on 'sin' and luxury goods over and above the proposed 40 per cent be fully transferred to states, he said.

"Eight Opposition-ruled states -- Karnataka, Himachal Pradesh, Jharkhand, Kerala, Punjab, Tamil Nadu, Telangana, and West Bengal -- have extended their support to the reduction in the number of GST rate slabs and a reduction in the rates themselves for items of mass consumption," the Congress leader said on X.

He said these states have also called for a mechanism that ensures that the benefits of the rate cuts get passed on to consumers.

They have also demanded compensation to all states for a period of five years with 2024-25 as the base year, since their revenues are bound to be adversely impacted by the rate cuts, Ramesh said.

The eight opposition-ruled states have also called for additional levies on 'sin' and luxury goods over and above the proposed 40% be fully transferred to states, he said, adding the Centre gets close to 17-18% of its revenue from various cesses that are not shared with the states.

The Congress leader stressed that these demands are perfectly legitimate and are bolstered by recent papers published by the Union Finance Ministry's own National Institute of Public Finance & Policy (NIPFP).

According to him, the Congress has for long been demanding a GST 2.0 that not only reduces rate slabs and cuts rates but also brings about drastic simplification of procedures and compliance requirements, especially for MSMEs.

Ramesh further said the Congress has also been stressing the essentiality of ensuring that the interests of all states are fully protected.

"It hopes that the GST Council meeting scheduled for next week will not be merely a headline-grabbing exercise so typical of the (Narendra) Modi government, but will also advance the cause of genuine cooperative federalism in letter and spirit," he added.