Karnataka sought extension of the Compensation Act beyond 2022 to bridge the revenue gap likely to arise out of a shortfall in the collection of the Goods and Services Tax (GST).
As the GST regime has taken over the state’s resource mobilisation efforts, the chief Minister, H.D. Kumaraswamy said that revenue shortfall would adversely impact developmental and other infrastructural projects across the state as well as the committed expenditure of the state government.
In the fifth meeting of the governing council of Niti Aayog, the Chief Minister said though trends showed that the State GST (SGST) component of the GST has been on the rise, the revenue gap was being bridged by the assured compensation till 2022.The state will have limited scope to mobilise additional revenue beyond 2022, there would be a steep fall in revenues by the end of fiscal 2022-23, as compared to protected revenue till fiscal 2021-22 due to the constitutionally guaranteed compensation.
Kumaraswamy stated that it was time to devise a mechanism to overcome erosion of the state’s tax base since the GST was being implemented with effect from July 1, 2017.
He said that the state’s revenues under the GST have not risen to our expectations despite their best efforts to bridge the gap and overcome the challenges faced in implementing it.
The state has taken steps to track non-filers and bill traders, data-analytic led enforcement and vigilance to detect suppression. He added that capacity building programmes to tax officers, awareness to stakeholders and other measures have, however, had a positive impact in enhancement of revenue when compared to the previous fiscal.
Source: https://www.thenewsminute.com/article/karnataka-wants-gst-compensation-extended-beyond-2022-103717
