Bengal: Amit Mitra welcomes GST cuts but warns of threat to states’ finances

Kolkata, Sep 5 (PTI) West Bengal Chief Minister's principal advisor Amit Mitra on Friday welcomed the GST rate cuts as a "very good step" in principle, but cautioned that the move could severely hit states' finances, undermining their ability to fund health, education and women's welfare.

In a post on X, Mitra shared a television interview to a news channel where he said that unless states' revenue losses are fully protected, "it violates federalism," and warned that the actual impact will be "far greater than officially acknowledged." He flagged the absence of the anti-profiteering authority — meant to ensure that tax cuts reach consumers — saying it raised doubts whether "common people get the benefit of this reduction." Mitra contested the Centre's estimate of a Rs 48,000 crore "revenue implication," insisting it should be termed a "loss." He argued the figure was a gross underestimate as it ignored supply chain effects, with producers eligible to claim input tax credit on higher-taxed inputs.

"Imagine thousands of inputs above 5 per cent, all will come back for credit. The loss will easily cross Rs 1 lakh-crore," he said.

The former finance minister also criticised the Centre for announcing the reform "without consulting states," adding that the views of 11 state ministers, including from the Northeast and the BJP, seeking compensation during the GST Council meeting "were muzzled." Accusing the Centre of deepening "federal fault lines," Mitra said states were already being denied their due share from fuel taxes as levies on petrol and diesel were structured as cess, which are not shareable. "This is horrible. You keep increasing cess to deny states 41 per cent of what they could get," he remarked.

To offset the shortfall, Mitra suggested two steps that would not hurt consumers — raising GST on tobacco and related products to 60-70 per cent, and converting fuel cess into tax so that states automatically receive their mandated share. PTI BSM MNB