Karnataka Chief Minister Siddaramaiah expressed worries about the adverse effects of the Central Government’s Goods and Services Tax (GST) rate rationalization on the state’s revenue collections. The state faces a significant shortfall in the current financial year due to the estimated revenue loss of about Rs 10,000 crore. Siddaramaiah highlighted that GST contributes 43% to Karnataka’s tax revenue, ranking the state second in GST collection nationwide.
The Chief Minister noted a decline in revenue collections following the unexpected GST rate rationalization mid-year, with monthly growth dropping from 10% to 4%. Nationally, GST collections have fallen below estimates, with a projected shortfall of Rs 1.3 lakh crore this year and Rs 2 lakh crore next year. Siddaramaiah emphasized the financial strain on states due to the decline in GST revenue and the impact of tax structure changes.
Siddaramaiah, along with seven other states, submitted a joint memorandum to the GST Council seeking measures to protect state revenues and compensate for losses. He urged the Centre to provide necessary compensation to offset revenue losses from GST rationalization. The Chief Minister also highlighted the importance of tax devolution share for states, emphasizing the need to balance equity with growth and recognize states’ economic contributions.
