NEW DELHI, Sept 9: The Union Finance Minister Nirmala Sitharaman on Tuesday said the GST reforms was a joint step of the Centre and the states and that the central government was not sitting with a “huge suitcase” to give money to the state if the tax collection was not done efficiently at all levels.
Responding to complaints from states that they will not be compensated for losses in revenue, if any, from the GST reforms, Ms Sitharaman said the decision was taken by consensus in the GST council with the Centre and states were in it together and a drop in revenue affects everyone.
Ms Sitharaman was asked about ministers from Jharkhand and Punjab saying during an earlier panel discussion at the event that the Centre should compensate for potential losses because of the GST reforms, which saw the main slabs being cut from four to two and a rate reduction on several goods.
The finance minister pointed out that the first thing she did after the GST council meeting ended on September 4 was to thank the members of the Council, who are ministers from various parties and states, because the reforms would not have been possible without everyone’s agreement.
Asserting that there was no acrimony during the meeting, Ms Sitharaman said, “The Union’s proposal going to the council was not opposed by anybody and they said this even before coming to the meeting. They said ‘we are in favour of the rate rationalisation, this is a people-friendly proposal’. To be fair to them, they all agreed on that. So, where is the difference, then? The difference is when they started speaking about ‘what if my revenues go down, who is going to give protection?”
States, she pointed out, had not been getting compensation since June 2022, and the compensation cess which was being collected is being used to repay the loan taken during the Covid pandemic. “So, compensation loss is not the issue. Revenue coming down is the issue, on which a difference of opinion prevailed. Commentators have said states’ revenues will come down. I would like to make a correction – in the GST Council, all of us are there together. I am not a donor and the states are not donees. We are sitting there saying we will have to collect the GST and efficient collection will benefit all of us,” Ms Sitharaman said.
“But if collections come down, all our efficiencies will have to be improved so that evasion is controlled and we actually collect everything that we need to. It’s not like the Centre is sitting there with a huge, big suitcase that I can give money if the GST is not efficient in its collection. The Centre is equally going to lose revenue if the states lose revenue… Centre vs states is not the point, all of us are together in it, and if states lose, I also lose. All of us will have to devise a way to improve collection,” she emphasised.
(Manas Dasgupta)
