In the 56th GST Council meeting, states reached a consensus on a two-slab structure as proposed by the Centre, but they are demanding assurance on a compensation mechanism to address potential revenue loss.
Opposition-ruled states are also in favour of the two-slab structure but insist on clarity regarding the mechanism to offset the expected losses.
Opposition states like Jharkhand, Tamil Nadu, Kerala, and Karnataka have raised concerns about revenue loss, stating that they will not approve the proposal in the Council’s meeting unless a clear compensation mechanism is outlined.
Speaking to the media, Jharkhand Finance Minister Radha Krishna Kishore said that they would not agree to the proposal until they understood the implications of the revenue loss.
Rajesh Dharmani, Minister for Technical Education, Himachal Pradesh, told reporters that they would explore possible solutions to address the loss.
Earlier, opposition states pointed out that the total revenue loss for all states could be around Rs 2.5 lakh crore, with individual states facing losses as high as Rs 10,000–15,000 crore.
States expressed concern that the revenue losses would directly impact their social welfare and development programmes.
A government source told TNIE that considerable effort would be required to get the two-rate structure passed.
The Council is scheduled to meet again on Thursday. Rate rationalization remains one of the key items on the GST Council’s agenda. Prime Minister Narendra Modi, in his Independence Day address on August 15, announced major reforms in the GST framework, promising fewer rates and easier compliance procedures.
