States Agree to GST Reform With Concerns
Eight opposition-ruled states – Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal – said they support the Centre’s plan to change GST tax rates. But they also warned that states could lose between Rs 85,000 crore and Rs 2 lakh crore every year if the changes are made without protection.
The states asked the Centre to give them revenue protection for at least five years, with a promise of 14% annual revenue growth. They said this was needed to keep development projects and welfare schemes running.
Centre’s GST Plan
The Centre has suggested replacing the current four GST slabs of 5%, 12%, 18% and 28% with two main slabs – 5% and 18%. A higher 40% tax is proposed for luxury and sin goods.
Prime Minister Narendra Modi said in his Independence Day speech that the reforms, expected before Diwali, would help reduce the tax burden for the common man, small businesses and MSMEs. The plan will be discussed in the GST Council meeting on September 3-4.
States Fear Big Losses
State leaders said earlier cuts in GST had reduced their income and the belief that reforms would increase revenue had proven wrong.
Karnataka’s minister Krishna Byre Gowda said: “Every time GST rates were reduced, states lost money. Revenues have not reached the levels we had before GST in 2016.”
Kerala’s minister KN Balagopal explained that last year the state earned only Rs 32,000 crore through GST, compared to Rs 51,000 crore it would have received under the old VAT system. He said this showed how much states are losing.
Jharkhand’s minister Radha Krishana Kishore added that even NDA-ruled states want compensation, though they may not say it openly. “This is about all states, not just opposition ones,” he said.
Demand for Compensation
The states want an extra tax on luxury and sin goods on top of the proposed 40% rate. They say the money should go directly to the states. If that is not enough, they want the Union government to borrow and support states.
Tamil Nadu’s minister Thiru Thangam Thennarasu said without revenue protection, welfare schemes and infrastructure projects would suffer. Punjab’s minister Harpal Singh Cheema said benefits should go to ordinary people, not just corporate houses.
Call for Centre-State Cooperation
The ministers said their demand is not political but necessary to protect state finances. Kerala’s Balagopal called the meeting “historically important” to strengthen cooperative federalism.
The upcoming GST Council meeting is expected to see a strong debate between the Centre and the states on how to balance reform with financial stability.
Nisham Ismail 
Leslie Rajan 
Nithin Rosh