CHENNAI: The Tamil Nadu government has urged the Centre to extend GST compensation by a couple of years as the state could face a revenue loss of approximately Rs 20,000 crore during the next financial year.
The GST compensation period is coming to end on June 30, 2022.
"The revenue growth which Tamil Nadu witnessed during the Value Added Tax regime has not been achieved since the implementation of the Goods and Services Tax (GST) Act. Moreover, the Covid pandemic has severely affected the finances of all states. Since the revenues of states are yet to recover from the impact of the pandemic, the Chief Minister has requested the Union government to extend this compensation for two more years," Finance Minister Palanivel Thiaga Rajan said in his budget speech.
The Finance Minister has also warned that global supply disruptions and demand shocks including those triggered by the Russia-Ukraine war can adversely impact the state's tax revenue.
"There is a prevailing consensus among economists that both inflation and interest rates may rise," the Finance Minister said while presenting the state budget for the year 2022-23.