Final call on GST compensation in August: Bommai

BENGALURU: The GST Council that met in Chandigarh this week discussed extension of GST compensation to the states, but a final decision will be taken in August, Chief Minister Basavaraj Bommai said here on Thursday.

The GST Legal Committee has taken measures to sort out legal impediments, while recommendations of the Fitment Committee have been accepted, he added. Originally, when the Goods and Service Tax or GST was implemented, the states were guaranteed to be compensated for the loss of revenue. It was decided that the loss would consider a 14 per cent increase in revenues year on year, but Covid hit the economy and caused a great loss overall. Because of the shortfall in tax collection under GST, states are seeking the extension of compensation.

When introduced five years ago, GST was the biggest indirect tax reform in the country and received appreciation because it amalgamated most of the indirect taxes of the Union and states into one comprehensive single tax system. It got rid of multiplicity of taxes, but the issue of compensation has now emerged as a challenge with about a dozen states seeking compensation. While the states claim that two years lost in the pandemic have to be compensated, the GST Council discussed the issue, but has not taken any decision in this regard so far.