Telangana Advocates for Balanced GST Reform with Compensation Strategy

Telangana supports GST rate rationalisation with a compensation mechanism, proposing either continued compensation cess for states or raising GST rates on luxury goods. Ensuring state revenue protection is crucial to prevent impact on welfare and infrastructure. There's concern over southern states receiving lower national revenue contributions.

Telangana has expressed its support for proposed GST reforms, emphasizing the need for a robust compensation mechanism to accompany any rate rationalisation. This stance was reiterated by Deputy Chief Minister Mallu Bhatti Vikramarka at a recent Group of Ministers meeting in the national capital.

Vikramarka highlighted that while the reduction of tax burden through rate rationalisation is welcome, it is imperative to safeguard state revenues to ensure that welfare and infrastructure projects do not suffer. He proposed the continuation of the present compensation cess or, alternatively, increasing GST rates on luxury goods to compensate the states directly.

The state government has stressed that these measures would not only alleviate tax pressure on ordinary taxpayers but also sustain ongoing welfare and development projects. It raised concerns over the southern states, including Telangana, receiving a lower share of national revenue despite substantial contributions, maintaining a growth rate lower than the projected 14 per cent.

(With inputs from agencies.)