GST: Karnataka CM Siddaramaiah bats for higher cess on tobacco products, luxe cars

Karnataka Chief Minister Siddaramaiah on Sunday urged the Centre to increase the cess on items such as cigarette, pan masala, gukta, and luxury cars and use it to compensate the states for the revenue shortfall arising from the proposed cut in GST rates reiterating his earlier demand.

Karnataka was estimated to lose about Rs 15,000 crore a year due to the rate changes, the CM told media persons in Mysuru. Revenue Minister Krishna Byre Gowda, he said, would highlight the state's concerns at the GST Council meeting scheduled in Delhi on September 3-4.

He, however, added that the state welcomed the GST rate cuts but wanted the Centre to compensate states for the consequent revenue shortfall. While the State always suffered financial losses due to the Centre’s actions, the BJP MPs never bothered to raise their voice against the injustice, the CM said.

Minister Krishna Byre Gowda, who represents Karnataka on the GST Council, said his state was in favour of rate rationalisation with protection against revenue shortfall. States were Constitutionally entrusted with the majority of developmental responsibilities, but the majority of revenue sources are with the Union Government, he told ET.

The revenue losses to the states are estimated to be about 15-20% of their current GST revenues, Gowda said.