GST Rate Cuts: States and Centre Share Revenue Impact
Finance Minister Nirmala Sitharaman clarifies that the Centre will not compensate states for potential revenue losses from GST rate cuts. She emphasizes the shared impact on both Centre and states, with reforms aimed at addressing previous system loopholes. GST 2.0 is expected to boost the economy significantly.
- Country:
- India
Union Finance Minister Nirmala Sitharaman announced no plans for states' compensation concerning revenue losses from recent GST rate cuts. She emphasized that the impact will be shared equally between the Centre and the states, with the Centre bearing a smaller portion due to tax devolution.
Opposition parties had pressured the BJP-led government for compensation amid concerns raised during a GST Council meeting. Sitharaman assured that the Council operates without a 'donor-donee' framework, highlighting an almost equal impact distribution.
Despite concerns, states agreed to the rate cuts constructively. Sitharaman pointed to previous revenue issues stemming from system loopholes and said the reforms aim to prevent them. GST 2.0 is poised to inject Rs 2 lakh crore into the economy, benefiting all citizens.
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