The GST Council is seriously discussing rationalisation, going through GST rates “item by item”, the Union Finance Minister, Nirmala Sitharaman, said in an interaction with the journalists of The Hindu group of publications, on Saturday.
Discussions have been going on in the GST Council on questions such as whether there should be four rates (5, 12, 18 and 28 per cent) and which items should attract what rate.
GST compensation
Answering a question on GST compensation and the compensation cess, the Finance Minister categorically said that continuing to give GST compensation to States was out of the question. Whether the compensation cess (which is to end in March 2026) would continue or not or if it would continue, and in what form, is currently being discussed by the GST Council.
Sitharaman said the States were better off after GST as they got more revenue than before. She noted that the revenue of Tamil Nadu, for example, never grew more than 6.5 per cent before 2017. Taking that as the baseline for calculating the State’s tax revenues, assuming GST had not been there and comparing it with what the State got after GST, she said the State was better off by ₹1 lakh crore. On the government continuing to levy a cess (even after the compensation ceased), she said that levying a cess to raise revenue was “constitutionally legitimate”.
On disaster relief
Responding to a question on the Central government not giving enough money for disaster relief — a strong complaint of the Tamil Nadu government — she said allocations made out of the National Disaster Relief Fund are governed by norms set by the Finance Commission, and the Central government could neither favour nor deny any State. She said that funds were always given to all States as per the standard operating procedure. She also wondered why even after the Central government organised a loan of ₹9,000 crore for drainage projects in Chennai, the city suffered during the Michaung hurricane.
Sitharaman also vehemently disagreed that the government of India was not releasing funds for the second phase of Chennai Metro, stressing that the State had, in 2018, taken a conscious decision to make it a State sector project, where the Centre’s role was only to arrange international loans.
She said the Centre had indeed arranged for ₹32,000 crore of loans from international development agencies.
On a question about holding the Census, the Finance Minister said that because of the Covid pandemic and the elections, it could not be done earlier. But it would be done soon, as announced. She stressed that nobody, including the Government of India, was against the Census being conducted.