Rs 50,000-cr worth GST compensation, Rs 8,000 cr under RDF pending: Punjab Finance Minister slams Centre
Cheema made the remarks while talking to the media in Delhi as he went to attend the GST Group of Ministers (GoM) meeting. He said that GST had inflicted a Rs 1.11 lakh crore loss on Punjab, with the Centre releasing only Rs 60,000 crore so far, while over Rs 50,000 crore and an additional Rs 8,000 crore under the RDF remained withheld.
Slamming the GST, the Punjab Finance Minister stressed that the state would not have suffered such massive revenue losses had it not joined the 'One Nation-One Tax' scheme and in fact it would have received much more revenue.
With the compensation cess now scrapped, he called out the BJP government for deliberately wrecking state economies to make them beg before the Centre. 'We honoured the central government's decision (on GST) and stood with the country, but Punjab suffered for it. Along with Punjab, many other states also suffered.'
'On August 20–21, the GoM met continuously for two days. On Wednesday, the meeting was on life and health insurance. In the evening, a meeting was held on compensation cess. The Chairman told us that today the meeting was on rate rationalisation, and that all members of the compensation cess would participate. Therefore, we also participated in Thursday's meeting,' he said.
'GST was implemented in 2017. In the past eight years, there have been 27 amendments in GST, with exemptions given to different sectors. Fifteen times the GST rates of various goods were reduced. This practice has been continuing in the GST Council for the last eight years, and for the past three years I have been witnessing it myself.'
Cheema also said that Prime Minister Narendra Modi earlier declared that there would be two GST slabs — one at 5 per cent and another at 12 per cent — and that 'everyone would celebrate Diwali'.
'But after the GST came, who will compensate for the loss suffered by Punjab and other states? Who will pay for this damage? One Nation, One Tax was the scheme of the central government, and all states including Punjab gave their consent. Everyone agreed that uniform tax rates should prevail across the country so that no state could impose higher or lower taxes on its citizens. But this formula has inflicted a huge loss on Punjab.'
Emphasising on Punjab's loss, the Finance Minister said, 'In all three meetings of the GST Group of Ministers, I placed Punjab's position. So far, Punjab has lost Rs 1,11,045 crore. Out of this, the central government has given Rs 60,000 crore compensation, but still Rs 50,000 crore remains with the central government. Who will pay this money?'
Cheema also said ever since the GST has been introduced, the BJP-led central government has kept making one amendment after another, but never reached a conclusion.
'Taxpayers of the country are being harassed continuously. The system of the country is being destroyed. Several states are continuously losing revenue due to the GST system. The central government has backed away from making up for this loss.'
Detailing the latest discussions, Cheema said, 'In Thursday's meeting on compensation cess, the government said that the loans taken to pay states under compensation cess would be fully repaid by October. On harmful goods (sin goods), a special tax was imposed. The states suffering losses in its collection were being compensated. But now the report of the rate rationalisation committee shows that even the tax slab on sin goods is being reduced.'
The Finance Minister also claimed that two days ago, another Rs 1,000 crore under the Prime Minister Road Scheme was also stopped.
'In this way, nearly Rs 60,000 crore is pending with the central government against Punjab. This includes the Rs 50,000-crore revenue loss (Punjab faced) after the (implementation of) GST. The central government must immediately release Rs 60,000 crore,' he concluded.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
28 minutes ago
- The Hindu
Address concerns of farmers, workers on priority, demands CPI(M)
The CPI(M) Andhra Pradesh State Committee has urged the Central and State governments to act immediately to address the hardships being faced by the farmers, workers, and citizens in the wake of floods, soaring power tariffs, and privatisation. Addressing the media in Vijayawada on Thursday, CPI(M) State secretary V. Srinivasa Rao, along with Central Committee member K. Lokanatham and State Secretariat member K. Prabhakara Reddy, outlined the resolutions passed at the State Secretariat meeting. Polit Bureau members B.V. Raghavulu and U. Vasuki participated. Mr. Srinivasa Rao said the party demanded ₹10,000 per acre compensation for crop losses in the Godavari region, urgent repairs to the tanks, canals, and roads, and a farmer-friendly crop insurance scheme fully funded by the Central and State governments. He said the party opposed land allocation to the LuLu Group malls in Visakhapatnam and Vijayawada, calling it harmful to small retailers, and urged use of lands for public and RTC development. He condemned the alleged forcible installation of smart meters and an additional ₹12,000 crore tariff burden. He said the party would observe August 28 as 'Pratijna Dinam' to commemorate the Basheerbagh firing incident. Mr. Srinivasa Rao appealed to the political parties to back the INDIA bloc's Vice-Presidential nominee Justice Sudarshan Reddy, and criticised the YSRCP, TDP, and JSP for siding with the BJP-led NDA on the issue. He further said that the party opposed the alleged privatisation of Visakhapatnam Steel Plant and forced land acquisitions, and demanded priority to tribal rights and Polavaram oustees' rehabilitation.
Economic Times
28 minutes ago
- Economic Times
GDP growth in Q1 projected at 6.7% on strong govt capex, rural demand
Strong government expenditure, strengthening rural demand, and buoyant services industry supported India's economic growth to a median of 6.7% in the first quarter of FY26, according to an ET poll of 14 economists. The growth estimates range from 6.3% to 7%, aligning with the Reserve Bank of India projection of 6.5%. India's gross domestic product (GDP) grew by 6.5% in the first quarter of last fiscal year. The National Statistics Office (NSO) will release the official GDP figures for the April-June quarter on August 29. The government's capital expenditure rose by 52% year-on-year in Q1. Aviation cargo traffic, goods and services tax (GST) collection, and steel production also recorded growth. 'GDP growth is expected to be supported by robust public spending, improving rural demand, and a resilient services sector,' said Rajani Sinha, chief economist, CareEdge Ratings. 'Construction and agriculture are two sectors where we have accounted for higher growth,' said Sakshi Gupta, principal economist at HDFC Bank. Exports of goods and services rose by 5.9% in the June quarter. 'This was aided by frontloaded demand from economies like the US,' said Gupta. However, the pace of growth in Q1 likely moderated from 7.4% in the March quarter, hindered by weakness in mining and manufacturing sectors. 'Global trade policy uncertainties and ongoing geopolitical tensions continue to weigh on the manufacturing sector, while the mining sector feels the brunt of early onset of monsoon,' said Sinha. 'Indicators such as power supply and coal production contracted in Q1, and air passenger traffic, cement production, steel consumption, and port cargo traffic were the key laggards,' said Aastha Gudwani, India chief economist at activity, measured by the Index of Industrial Production (IIP), grew 2% in Q1FY26 compared to 5.4% a year earlier, while manufacturing output fell to 3.4% from 4.2%. 'The GDP growth in Q1 would be impacted by the weak industrial sector growth (due to climate change-led unseasonal rains) and cautious investment demand owing to geopolitical and trade tensions,' said Paras Jasrai, associate director, India Ratings & Research. 'The slowdown in growth from the previous quarter was due to a likely slowdown in fixed investment growth —as private sector investment remains muted amid the prevailing global trade policy uncertainty — and a muted growth in private consumption,' said Hanna Luchnikava-Schorsch, head of Asia-Pacific Economics at S&P Global Market ahead, India's GDP for FY26 is estimated to grow by a median of 6.3%, slightly below the RBI's projection of 6.5%. The estimates range from 6% to 6.6%. 'Growth will be supported by recent interest rate cuts, strong agricultural activity boosting rural demand, benign inflationary conditions, and a favourable monsoon,' said Sinha. Further, domestic demand is set to get a boost following the GST rationalisation, said economists. The six-member Group of Ministers (GoM) on GST rate rationalisation Thursday approved the Centre's proposal to eliminate the 12% and 28% slabs, consolidating the GST structure into two rates — 5% and 18%. This shift from the existing four-slab structure is expected to spur consumer demand in the second half of FY26, potentially adding 20 basis points to annual GDP growth, according to HDFC Bank. However, risks from global trade tensions remain significant. The US has imposed a 50% tariff on Indian imports, including a 25% penalty for importing oil from Russia. 'We estimate a 30 bps impact of US tariffs on India's growth for the full year, in case the current 25% tariff rates stick (we expect them to be eventually lowered following trade discussions with the US),' said Gudwani. HDFC Bank also expects a 20-25 bps risk to GDP growth if the 25% tariff persists. 'On the domestic front, subdued income growth in the formal sector and muted hiring in IT remain concerns for urban consumption, even as rural demand holds steady,' said Sinha. The World Bank and International Monetary Fund (IMF) pegged India's FY26 growth at 6.3% and 6.4%, respectively. As per their estimates, India remains one of the world's fastest-growing economies. Despite these headwinds, analysts believe India's strong domestic demand will help cushion the impact of external shocks. 'Overall, given the relatively closed nature of the Indian economy wherein domestic demand is the mainstay of growth, we do not see this 25% tariff threat impacting GDP growth meaningfully,' said Gudwani.
Economic Times
28 minutes ago
- Economic Times
GoM clears GST 2-slab overhaul, revenue loss in focus
Synopsis India's GST structure is set for simplification. A group of ministers approved a plan to move to a two-slab system. The GST Council may meet in early September for faster implementation. The new structure includes 5%, 18%, and 40% slabs. States are concerned about potential revenue loss. The Department of Revenue will assess the impact. Agencies The simplification of India's goods and services tax (GST) structure took a significant step forward with the group of ministers (GoM) on rate rationalisation unanimously accepting the Centre's proposal to move to a twoslab structure of 5% and 18% with a special 40% levy for sin goods, paving the way for next-generation reforms in the country's eight-year-old indirect tax GST Council, the apex decision-making body for the tax, could meet in the first week of September instead of the second half of next month as planned earlier, to ensure early implementation of the reform in time for Diwali, people familiar with the matter said. The GoM, chaired by Bihar deputy CM Samrat Chaudhary, approved the Centre's proposal to abolish the 12% and 28% rates, shifting goods to the 5%, 18% and 40% slabs. The proposal was unanimously accepted by the six members present —three each from states ruled by the BJP and the opposition—as they all favoured giving relief to the people. All states want ultra-luxury cars and high-end products in the highest slab of 40%.However, some states also wanted the Centre to assess the revenue loss to states due to the reform and ways of compensating them, something they said was missing in the Centre's proposal. 'Both the proposals of the Centre have been accepted by the GoM on rate rationalisation,' Choudhary told reporters after the meeting. The GST Council, which set up the GoM, will discuss the reform proposals item by item at its meeting. Prime Minister Narendra Modi had announced the plan to reform GST during his Independence Day address on August 15, calling it a Diwali gift. A revamped GST is expected to lower prices, boost consumption and drive economic growth amid global economic uncertainty. Revenue concern The biggest concern for states is the revenue loss on account of the changes and the absence of a mechanism for compensation as most of them depend heavily on GST revenue.A recent SBI research report suggested that the Centre's GST reform proposal could cost Rs 85,000 crore to the exchequer annually. The Department of Revenue will conduct an assessment of revenue loss that will be presented to the GST Council.'We have said we are okay with any rate rationalisation proposal, which is pro-people, but we should also know the revenue loss that we are going to suffer,' West Bengal finance minister Chandrima Bhattacharya said. 'Because, ultimately, if a state suffers any loss, then it boils down to the sufferance of the common man.'She suggested amending the GST law to allow imposing a levy over and above the 40% permissible rate, to maintain overall tax rates on these products once the compensation cess ends. Other opposition states supported that view. Telangana deputy chief minister Mallu Bhatti Vikramarka said rate rationalisation must be balanced by ensuring that revenues of the states are protected. Otherwise, welfare schemes meant for poor people and the middle class will be hit as will infrastructure projects, he said. He suggested that the GST rate on sin or luxury goods be increased to current levels and the additional amount collected be given to the states.
