GST Council meeting in August to decide on extension of compensation to States: Karnataka CM

After incurring huge revenue loss in the two years of the COVID-19 pandemic, States have sought an extension of the compensation mechanism for another five years, till 2027

Karnataka Chief Minister Basavaraj Bommai, who returned to Bengaluru after attending the 47 th GST Council meeting in Chandigarh on June 28-29, said the Council will take a final decision in August on the contentious issue of extension of GST compensation to States.

The GST Council – the highest decision-making body of the indirect tax regime, which is headed by Union Finance Minister Nirmala Sitharaman and comprises representatives of all States and UTs – discussed the issue in Chandigarh, but could not arrive at a decision, Mr. Bommai said.

Speaking to reporters in Bengaluru on June 30, Mr. Bommai, who heads the Group of Ministers on GST, submitted to the Council an interim report on calibration of GST rates on various commodities.

Almost all States have been demanding GST compensation for another five years.

When GST was rolled out in 2017, States were assured of compensation for revenue loss till June 2022. The GST subsumed 17 Central and State levies from July 1, 2017, and then it was decided that States will be compensated for any loss of revenue on account of the new tax structure for five years.

After incurring huge revenue loss in the two years of the COVID-19 pandemic, States have sought an extension of the compensation mechanism for another five years, till 2027.