Naveen writes to Jaitley on compensation for CST loss

Batting for states, Odisha Chief Minister Naveen Patnaik today urged Union Finance Minister Arun Jaitley to take immediate steps for compensating them for the Central Sales Tax (CST) loss for four financial years, 2013-14 to 2016-17, on account of GST rollout.
"I would, therefore, request that the Union Government take immediate decision for compensation of CST loss to states for the year 2013-14 to 2016-17. I look forward to your response in the matter at the earliest," Patnaik wrote to Jaitley.
Billed as the biggest tax reform since Independence, India is looking to rollout the Goods and Services Tax from April next year. The GST will subsume various indirect taxes at the state as well as the central level and have uniform rates making the country a more cohesive market for movement of goods and services nationwide.

Patnaik said states had earlier reduced the rate of CST from 4 per cent to 2 per cent as per the recommendation of the Empowered Committee of State Finance Ministers at a meeting held in Bhubaneswar on January 28 and 29, 2013.
The central government was required to give 100 per cent CST compensation to states up to the year 2010-11; 75 per cent for 2011-12 and 50 per cent for 2012-13.
"In the same meeting, it was also decided to review payment of full CST compensation for the year 2013-14 and 2014-15 in case GST is not implemented during the year 2013-14. Accordingly, the Union government has been releasing the compensation for CST loss to the states upto the year 2012-13. No decision has been taken regarding compensation of CST loss to states for the year 2013-14 to 2016-17," Patnaik mentioned in the letter.

Stating that the states are facing financial constraint due to slowdown in the economy and the loss of revenue on account of reduction in the rate of CST, Patnaik said it has further impacted the financial position of states during the year 2013-14 to 2016-17.
He also informed the Union Finance Minister that Odisha Legislative Assembly has ratified the Constitution (122nd Amendment) Bill, 2014 unanimously as passed by both Houses of Parliament by convening a special session of the Assembly on September 1, 2016.