UP demands Rs 2,711-cr against tax revenue loss

Akhilesh writes to Jaitley claiming revenue loss accrued to state as Centre reduced CST from 4% to 2%

Uttar Pradesh government has raised demand of Rs 2,711 crore from the Centre as compensation for the purported revenue loss on account of central sales tax share.

The demand comprises Rs 1,392 crore and Rs 1,319 crore for 2011-12 and 2012-13 financial years respectively.

UP chief minister Akhilesh Yadav has written to Union Finance Minister Arun Jaitley claiming the revenue loss accrued to the state when the Centre had reduced CST from 4% to 2%.

He asserted the state was in dire need of finances due to the various development works already underway.

Earlier, the Centre; with a view to introducing Goods and Services Tax (GST) from April 1, 2010; had reduced the CST from 4% to 3% effective from April 1, 2007, which was subsequently reduced to 2% from June 1, 2008 onwards.



In his letter, Yadav mentioned since the GST ecosystem was yet not implemented, it was only imperative that the Centre compensated UP for the resultant loss to its purse.

The union finance ministry (revenue department) had issued a directive on August 22, 2008 regarding the compensation to states incurring revenue loss due the reduction of CST.

Pursuant to this, the UP government had forwarded claims for the individual financial years from 2007-08 to 2010-11, of which the Centre had settled claims till 2010-11.

Meanwhile, Yadav has urged the union finance ministry to settle claims for the following financial years as well till GST is implemented.