Change in GST law needed for benefit of producer states: TS Singh Deo

On Friday, a senior legislator from Chhattisgarh emphasized the necessity for legislative amendments in the goods and services tax (GST) law to allocate a greater share of revenue to producer states like Chhattisgarh. Chhattisgarh\’s deputy chief minister, T.S. Singh Deo, also advocated that the Centre\’s share of GST revenue should not exceed 20%.

He pointed out that states currently receive only 71% of the revenue, with the remaining 29% going to the central government, a situation he deemed unfair. Deo urged for corrections in the GST structure, particularly for producing states and mineral-rich states like Chhattisgarh. He clarified that while 50% of GST revenue goes to states, the remaining 50% allocated to the Centre sees 41% devolved back to states according to the Finance Commission formula, resulting in the states\’ overall share being approximately 71%.

Deo insisted that this percentage is lower than what states received during the VAT regime before the GST era. He proposed that no more than 20% of the revenue should go to the Centre from GST. Finance Commissions, which recommend the sharing of the Centre\’s tax revenue with states and also provide suggestions on tax reforms, efficiency in tax administration, and expenditure reforms, play a crucial role in this context.

Deo added that changes to the GST law have been implemented before, and this demand from producer states should be addressed by the GST Council in the spirit of cooperative federalism.

He expressed concerns about state local bodies being excluded from a third of the devolution of funds, and the Centre attempting to take ownership of state-level schemes without providing adequate funds. Deo highlighted the challenges to the decentralized structure and federal independence of state bodies posed by the interference of the central government.

Regarding the 16th Finance Commission\’s terms of reference, Deo emphasized the need for corrective actions, such as ensuring state assets remain with the state rather than being privatized, especially when they are profitable and can enhance the purchasing power of the state\’s residents.

Despite potential disagreements between the Centre and states on financial matters, Deo asserted that the Centre should not interfere in state matters, preserving the federal identity of states and their local bodies. Looking ahead to the state assembly election results, he expressed confidence in his government\’s performance and anticipated another term to continue their positive work.

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