State Government anxious over raising demands for GST rate cuts

The government, which recorded robust growth in tax collection for the current year, is on tenterhooks over the outcome of Friday’s Good and Services Tax council meeting, where demand for a reduction in tax rates is expected to be discussed.
The government is concerned that a downward revision in tax may have negative implication on the state’s revenues at a time when it has to mobilise resources to fund flood relief and drought mitigation work.
Karnataka has collected Rs 33,618 crore in commercial tax as against a target of Rs 76,046 crore for 2019-20.
With a growth rate of 14.3 %, the state is in comfortable position, but reducing taxes could result in a shortfall of about Rs 8,000 crore.
While indications are that the GST council may not cut tax rates with the fitment committee opposing the proposal, authorities sought to assure industry by suggesting the council’s decision will be pragmatic.