Odisha was among at least a dozen states, which sought extension of the compensation, during the 47th meeting of the GST Council held on Tuesday and Wednesday at Chandigarh.
With two years being lost in the pandemic, states have sought an extension of this compensation mechanism.
As the GST Council commenced here on Tuesday, the states have also cited a recent Supreme Court ruling that decisions made by the Council are not binding and states need not stick to them.
On Wednesday, Chief Minister Uddhav Thackeray had said that the Centre owed Rs 26,500 crore to the state.
Modi raised the issue of many states not adhering to the Centre's call for reducing the VAT on petrol and diesel after his government slashed excise duties on them in November last.
The minister said this while responding to questions from PMK floor leader GK Mani, ER Eswaran of the KDMK and T Velmurugan of TVK in the Assembly during zero hour.
CM made this demand during his meeting with Union Finance Minister Nirmala Sitharaman in New Delhi.
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
Union Finance Minister Sitharaman said the GST council has already decided to extend the compensation cess period till March 2026.
While claiming that Chhattisgarh received lesser share of central taxes, Baghel suggested the Centre should compensate the loss of revenue of about Rs 5,000 crore in the coming years.
CM Bhupesh Baghel said there has been a loss of revenue to the states due to the GST tax system, and that the Center has not made arrangements to compensate for the loss of revenue the coming year.
Centre committed to compensate states for 5 years for revenue loss due to GST roll out: Finance Minister Nirmala Sitharaman
Sitharaman said Rs 37,134 crore and Rs 14,664 crore worth GST compensation is yet to be released to states for 2020-21 and 2021-22 fiscal years respectively.
States of Arunachal Pradesh, Manipur, Mizoram and Nagaland do not have any GST compensation pending from the Centre.
With this, the total amount of compensation released to the states/UTs during 2021-22 so far is Rs 60,000 crore, the Finance Ministry said in a statement.
The release is expected to help the State in planning its public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects.