Kerala FM seeks extension of GST compensation regime

New Delhi: Kerala Finance Minister K N Balagopal on Saturday pitched for extending the GST compensation beyond June next year as he highlighted that the state is already grappling with significant revenue shortfall.

Addressing the media here, the minister said the state is not getting its due in the wake of the 15th Finance Commission devolution recommendations.

Kerala will be receiving GST (Goods and Services Tax) compensation of over Rs 13,000 crore and another one-time grant of over Rs 19,000 crore in the current fiscal ending March 2022, he noted.

In case the GST compensation ends next year, then the state will face further revenue shortfall, he said and expressed hope that the compensation regime would be extended.

The regime of paying compensation to states for revenue shortfall resulting from subsuming their taxes such as VAT in the uniform national tax GST will end in June next year.

However, the cess which is currently levied on top of the GST rate on certain luxury and sin goods to fund the compensation amount for states will continue to be levied till March 2026. The collections will be used to pay off the borrowings that had to be done since 2020-21 to pay for state compensation.