HYDERABAD: While welcoming the tax reforms proposed by the 14th Finance Commission, the Andhra Pradesh government demanded that the loss of revenue due to implementation of Goods & Service Tax (GST) should be fully compensated by the Union government. The estimated loss of revenue due the implementation of GST in the state is about Rs 4,000 crore.
Andhra Pradesh finance minister Yanamala Ramakrishnudu attended the meeting held by the Empowered Committee of State Finance Ministers with the 14th Finance Commission at Vigyan Bhavan in New Delhi on Wednesday.
The finance minister demanded that the compensation mechanism should be such that there should be an independent body to release the compensation and it should not leave any scope for whims and fancies of the Union government. If possible, it should be made part of the constitutional provisions, he said.
While demanding the Centre to keep petroleum products outside the purview of the GST, as the loss of revenue would be considerable, the minister, however, said that in case they are exempted, permanent production-linked compensation to the state should be provided and the successive Finance Commissions should be asked to make recommendations thereof.
He said as a measure of building confidence among the states in promise of the Union government to compensate CST loss, the Centre should release the amount of loss of revenue due to phasing out of CST. The compensation should be released in full for the entire period and such loss to the state of AP is Rs 7,200 crore, he said.
He urged the Finance Commission to recommend to the Centre to provide sufficient financial resources to relieve the fiscal stress on AP.