Raising concerns over the design of Goods and Services Tax (GST) and delay in the release of revenue share of states, Opposition-ruled states Madhya Pradesh and Punjab said the issues were affecting the functioning of states. Punjab’s Finance Minister Manpreet Singh Badal called for a fresh look at the GST structure, saying the current system was “badly designed”.
Badal said the Council should desist from cutting rates around state elections as a favour. “Punjab has been consistently opposing the design of the current GST … the arrogance which is there within the Council, the idea of giving favours and knee-jerk reactions, for example, if there is Gujarat election you immediately cut rates. We should desist from that,” he said.
Badal further said, “If I am not mistaken, in the last two years we have had almost 4,000 changes in the GST law, changes and amendments for which they have to go to Parliament and state legislatures. Can you imagine if there was a patient and was operated on 4,000 times would there be anything left of the patient?”
Madhya Pradesh’s Chief Minister Kamal Nath said that most of the BJP-ruled states sign on dotted lines in the GST Council meetings.
“GST Council consists of states. The states are falling in line with the central government because they may be run by one party. If they are few states and rest are being run by one party then they come to sign on dotted lines. It is pre-determined. There is no engagement. There is no intellectual understanding of the situation. It’s all in theory. All on paper. We must recognise and we cannot shut our eyes to this,” he said while speaking at the India Economic Summit.
Punjab Chief Minister Amarinder Singh said there is a delay in the release of states’ revenue share under GST. “In the meantime, what do we do. Now
for our expenditure, we have to borrow money. This is a very sad thing that is happening,” he said.
On Wednesday, Kerala Finance Minister Thomas Isaac had also pointed out to the low revenue under GST, saying it’s a sign of issues under GST apart from the economic slowdown. “Record low GST collection is not only a reflection of economic slowdown but also the mess in GST administration. What compliance can you expect when even first annual return is yet to be filed? And also rates have been continuously slashed to less than revenue neutral levels,” he had tweeted.
A senior Finance Ministry official said states are equal participants in all rate reductions and deliberations under GST. “As far as the rate cuts are concerned, most of the rate cuts happened during 2018. It may be noted that during the period Nov 2018 to Mar 2019, GST revenues have seen a growth rate of 14 per cent. It is only after May, 2019 that lower growth rates of the level of 5 per cent are being observed. The only major rate rationalisation that happened during the current calendar year is that pertaining to real estate which is not even in the nature of rate cut… linking sudden drop in revenues to rate reduction alone would be farfetched, because the same rate structure was leading to high revenue growths during the last quarter of the previous financial year,” the official said.