Chief Minister Pinarayi Vijayan on Thursday urged Prime Minister Narendra Modi to extend GST compensation for States till 2027.
In a letter to Mr. Modi, Mr. Vijayan requested the Prime Minister to view the request sympathetically. The Centre had promised to pay compensation for any shortfall in State revenues caused by the GST regime in the initial five-year introductory phase.
The Centre and States introduced the GST regime in 2017 to harmonise the value-added tax structure to prevent the cascading effect of regional taxes. The States had forgone their revenue autonomy in some measure for value-added tax rationalisation.
The expert committee had recommended that the Centre and State split GST revenue in a 60:40 ratio. Post GST, the State revenue plunged from 14.5% to 9%. Mr. Vijayan said the GST extension till 2027 would give a leg up to States struggling to clamber out of the COVID-19 pandemic-caused depression.
