<p>Karnataka told the GST Council on Thursday that luxury goods, tobacco and pan masala should be taxed higher while making a desperate plea for more money to face the Covid-19 pandemic anticipating a shortfall in tax revenues.</p>.<p>Home Minister Basavaraj Bommai, who represents the state in the GST Council, said Karnataka would find making financial progress difficult given the circumstances.</p>.<p>“The total tax revenue in Karnataka is estimated to be Rs 1.80 lakh crore. The is likely to come down because of the Covid-19 pandemic and the flood situation. Therefore, it will be difficult for Karnataka to make financial progress and there’s a need for additional money to face Covid-19,” Bommai said.</p>.<p>According to Bommai, Karnataka has to get Rs 13,764 crore GST compensation from the Centre for the last four months, which he said is necessary for the state’s economy. “Despite Covid-19, the rate of GST collection in the state for the last four months is 71.61%, which is higher when compared with other states,” he pointed out.</p>.<p>While asking the Centre to borrow in order to compensate the state, Bommai also pitched for higher taxation of luxury goods, tobacco and pan masala.</p>.<p>The GST structure has four tax slabs - 5, 12, 18 and 28 per cent. A cess is levied on top of the highest tax slab, which is used to compensate states for revenue losses.</p>.<p>“Since the cess gets remitted directly into the Centre’s compensation account, it will be difficult for the states to borrow loans. Plus, the Centre has the power to levy a special tax to repay the loan, which can be extended beyond 2023. So, it’s appropriate for the Centre to borrow and compensate the states,” Bommai argued.</p>.<p>A reduced share in Central taxes, delay in GST compensation and loss of revenue due to the Covid-19 lockdown have put Karnataka under financial stress, a problem compounded with back-to-back floods. Chief Minister BS Yediyurappa has maintained that the government was ready to even borrow to fund developmental works.</p>
<p>Karnataka told the GST Council on Thursday that luxury goods, tobacco and pan masala should be taxed higher while making a desperate plea for more money to face the Covid-19 pandemic anticipating a shortfall in tax revenues.</p>.<p>Home Minister Basavaraj Bommai, who represents the state in the GST Council, said Karnataka would find making financial progress difficult given the circumstances.</p>.<p>“The total tax revenue in Karnataka is estimated to be Rs 1.80 lakh crore. The is likely to come down because of the Covid-19 pandemic and the flood situation. Therefore, it will be difficult for Karnataka to make financial progress and there’s a need for additional money to face Covid-19,” Bommai said.</p>.<p>According to Bommai, Karnataka has to get Rs 13,764 crore GST compensation from the Centre for the last four months, which he said is necessary for the state’s economy. “Despite Covid-19, the rate of GST collection in the state for the last four months is 71.61%, which is higher when compared with other states,” he pointed out.</p>.<p>While asking the Centre to borrow in order to compensate the state, Bommai also pitched for higher taxation of luxury goods, tobacco and pan masala.</p>.<p>The GST structure has four tax slabs - 5, 12, 18 and 28 per cent. A cess is levied on top of the highest tax slab, which is used to compensate states for revenue losses.</p>.<p>“Since the cess gets remitted directly into the Centre’s compensation account, it will be difficult for the states to borrow loans. Plus, the Centre has the power to levy a special tax to repay the loan, which can be extended beyond 2023. So, it’s appropriate for the Centre to borrow and compensate the states,” Bommai argued.</p>.<p>A reduced share in Central taxes, delay in GST compensation and loss of revenue due to the Covid-19 lockdown have put Karnataka under financial stress, a problem compounded with back-to-back floods. Chief Minister BS Yediyurappa has maintained that the government was ready to even borrow to fund developmental works.</p>
