Opposition states seek change in GST revenue-share formula

Some Opposition states on Tuesday sought change in the Centre's revenue-sharing formula with states, as the Centre is unwilling to extend compensation under the goods and services tax (GST) to states beyond the committed period of five years.

In a letter to finance minister Nirmala Sitharaman, Chhattisgarh finance minister TS Singh Deo said the existing formula of equally splitting revenues from the GST between the Centre and states should be changed as states have incurred revenue loss.

"If the protective revenue provision is not continued, then the 50:50 formula for central GST and state GST should be changed to 30:70 or 20:80," said Deo who gave the ongoing GST Council meeting a miss due to Covid-19 infection.


He said Chhattisgarh had suffered a revenue loss of Rs 4,127 crore in the last fiscal, Rs 3,620 crore in 2020-21, Rs 3,176 crore in 2019-20, and Rs 2,786 crore in 2018-19.

Currently, revenue collected from GST is shared equally between the Centre and states. The collection from cess levied on luxury, demerit and sin goods is used entirely to compensate states for revenue loss due to GST implementation.

Amit Mitra, principal chief adviser to West Bengal chief minister Mamata Banerjee, said all GST decisions should be by consensus, citing a recent judgment of the Supreme Court in this regard. "Post decision of the SC, it has become imperative for the GST Council to take every decision by consensus and to leave aside any shade of majoritarianism, not only for the future credibility of GST Council but also to uphold the rich tradition of this august body," the former finance minister of the state said in a two-page letter to Sitharaman.

The Supreme Court had on May 19 ruled that the GST Council's recommendations are not binding on Union and states but have a persuasive value as the country has a cooperative federal structure.

Other Opposition-ruled states including Kerala, Punjab and Delhi have asked for extension of GST compensation for two more years.