Extending Andhra Pradesh Government’s support to the proposed tax reforms, State Finance Minister demanded that the Union Government compensate the loss of revenue due to implementation of the Goods and Services Tax (GST).

He urged the Finance Commission to recommend the Centre to provide sufficient financial resources to relieve the fiscal stress of Andhra Pradesh due to bifurcation. Taking part in the meeting held by the Empowered Committee of State Finance Ministers with the 14th Finance Commission at Vigyan Bhavan in New Delhi on Wendesday, Yanamala Ramakrishnudu, Finance Minister, Government of Andhra Pradesh, wanted the Centre to compensate as the loss is estimated to be about ₹4,000 crore.

Independent body

In his presentation, he suggested the compensation mechanism should be such that there should be an independent body to release the compensation which not leave any scope for whims and fancies of the Centre and if possible, should be made part of the constitutional provisions.

He expressed that the agricultural products should not be exempted under GST, as the loss of revenue would be considerable. In case they are exempted, a permanent production-linked compensation to the State should be provided and the successive Finance Commissions should be asked to make recommendations thereof.

The Minister demanded that Petroleum products be kept outside the GST and States should continue to levy taxes on them at present rates. As a measure of building confidence among the States by the promise of the Central Government to compensate GST loss, the Centre should release the amount of loss of revenue due to phasing out of CST.

Compensation

The compensation should be released in full for the entire period and such a loss to Andhra Pradesh is around ₹7,200 crore.

The State Finance Minister made a special mention about the need for special dispensation to the State to address several financial problems being faced after bifurcation of the state.

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