CM Siddaramaiah backs GST rate rationalisation; urges Centre to release compensation cess to states

Bengaluru, Sep 5 (PTI) Karnataka Chief Minister Siddaramaiah on Friday welcomed the GST Council’s decision to rationalise GST rates and said the state could lose Rs 15,000-20,000 crore in revenue due to the move. He urged the Centre to devolve the compensation cess, still being collected on certain sin goods, back to the states.

He also stressed that the union government and the Central Board of Indirect Taxes and Customs (CBIC) must ensure that the benefits of GST rationalisation reach consumers.

"We welcome the decision of the GST Council to rationalise GST rates, an important step to reduce both the monetary and compliance burden on people and businesses," Siddaramaiah said in a statement.

He added that the decision was not new wisdom, but a long-delayed acceptance of demands raised since 2016-17 by Congress leader Rahul Gandhi, opposition parties, and opposition-ruled states, following the hurried rollout of GST by the Modi government.

"From the very beginning, we had warned that this 'Gabbar Singh Tax' would crush small businesses, increase compliance costs, and burden ordinary families. Sadly, Prime Minister Narendra Modi chose to ignore these warnings for eight long years," he said.

Explaining the GST voting structure, Siddaramaiah noted that the union government holds one-third of the total voting power while all states together share the remaining two-thirds, meaning a three-fourths majority is required for any reform.

"This means that even if all states agree, a stubborn central government can block reforms. That is exactly what Modi’s government did. Today’s course correction proves that our stand was right all along. The people of India could have been spared years of hardship had the union government listened earlier," he claimed.

Siddaramaiah reiterated that the reduction in rates must lower prices for consumers, not increase profit margins for large corporates.

"If the benefits fail to reach the common man, the blame will rest squarely on the union government," he said.

Highlighting that Karnataka alone could lose Rs 15,000-20,000 crore in revenue due to the decision, the CM said, "Yet, keeping the welfare of our people above everything else, we welcome it. But we also strongly urge the Union Government to devolve the GST compensation cess, still being collected on certain sin goods, back to the states." He added, "As a state, we remain committed to building an economy that increases people’s purchasing power, widens the tax base, and ensures prosperity for all. For us, governance is not about optics; it is about empowering every citizen of Karnataka and India." PTI KSU SSK ROH