Eight States Warn of Revenue Loss From GST Restructure, Seek Central Compensation

Ministers and representatives from eight states—Kerala, Himachal Pradesh, Jharkhand, Karnataka, Punjab, Tamil Nadu, Telangana, and West Bengal—have raised strong concerns that the proposed Goods and Services Tax (GST) restructure could lead to significant revenue losses for states, limiting their ability to fund welfare and development projects. Meeting in the national capital on Friday, these states resolved to communicate their objections to the GST Council.

They emphasized that any GST rate cuts should be accompanied by a compensation scheme from the central government to make up for states’ potential losses. Kerala’s finance minister K.N. Balagopal, who is also a member of the GST Council’s ministerial group, stressed that the benefits from GST relief must be transferred directly to consumers by businesses, rather than resulting in profiteering.

The participating states agreed to urge the GST Council to enforce rules ensuring that businesses pass on any tax benefits to consumers. Balagopal stated that all eight states are keen to cooperate with the Union government and other state governments so that GST rate rationalisation leads to positive outcomes for every stakeholder. In their joint statement, the ministers and representatives reiterated their apprehension about the negative financial impact of the proposed GST changes and the need for safeguards to protect state finances and public welfare.