NEW DELHI: The Congress party announced on Saturday that eight opposition-led states have backed the proposal to simplify the Goods and Services Tax (GST) rate slabs and reduce rates for mass consumption items. However, these states have stressed the need for safeguards to protect their fiscal interests.
Congress leader Jairam Ramesh urged the government to ensure that the benefits of rate reductions are passed on to consumers and not used as a headline-grabbing tactic.
He also emphasised the importance of advancing cooperative federalism during the upcoming GST Council meeting. The eight states—Karnataka, Himachal Pradesh, Jharkhand, Kerala, Punjab, Tamil Nadu, Telangana, and West Bengal—have called for compensation for the potential revenue losses they will incur due to the rate cuts, with 2024-25 as the base year. They have also demanded that any additional levies on ‘sin’ and luxury goods be fully transferred to the states.
Ramesh further pointed out that the Centre retains 17-18% of its revenue through cesses that are not shared with the states. He called these demands perfectly legitimate and backed by research from the Union Finance Ministry’s National Institute of Public Finance & Policy (NIPFP).
The Congress leader reiterated that his party has long advocated for a simplified GST system, particularly one that benefits small and medium-sized enterprises (MSMEs).
The Congress leader said his party has advocated for a simplified GST framework, particularly for MSMEs, and hopes that the upcoming GST Council meeting will prioritise genuine cooperative federalism over political posturing.