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Opposition States Back GST Rate Cuts, Seek 5-Year Compensation and Extra Levies

The group will present a joint plan at the Sept 3–4 GST Council meeting following estimates of a ₹1.5–2 lakh crore annual shortfall.

Overview

  • The Centre has proposed collapsing GST into two core rates of 5% and 18% with a separate ~40% rate for select sin and ultra‑luxury goods, with a rollout targeted before the festive season.
  • Finance ministers from Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal say states could lose 15–20% of current GST receipts.
  • The coalition seeks guaranteed compensation for at least five years using FY2024–25 as the base year and protection at 14% annual revenue growth.
  • Their plan calls for an additional duty above the 40% rate on sin and luxury items with proceeds fully transferred to states, and Centre‑raised loans if gaps persist.
  • They also want anti‑profiteering safeguards to ensure tax cuts reach consumers, warning that fiscal strain without cover would curb welfare and development spending.