Overview
- The Karnataka chief minister has written to the prime minister seeking compensation for revenue lost due to the GST Council’s recent rate rationalisation.
- He proposes using 2024–25 as the base year for calculating revenues, grossed up for the compensation cess, to better reflect state fiscal capacity.
- Citing official figures, he notes gross GST growth fell to 3.3% and net domestic GST to 1.7% year-on-year during September–November 2025.
- He projects a national shortfall of Rs 85,000 crore this year that could reach Rs 1.2 lakh crore for the full year, with Karnataka expecting Rs 5,000 crore this year and Rs 9,000 crore in 2025–26, excluding about Rs 9,500 crore from the non-merger of the compensation cess.
- He objects to a special pan masala cess outside the GST framework, urges a 50:50 revenue share with states, and warns that routing it through a central scheme would limit state autonomy.