Opposition states seek revenue protection at upcoming GST Council meeting: Sources

Opposition-ruled states have demanded revenue protection and consumer safeguards as the 56th GST Council meeting began on Wednesday, sources said.

The proposed GST revamp, which aims to reduce the system to two slabs — 5% and 18% — is expected to make essentials and electronics cheaper while raising levies on luxury goods.

States are insisting on strict checks against profiteering and a clear compensation formula to offset revenue losses. With the Centre’s original five-year compensation mechanism having lapsed in June 2022, they want proceeds from the proposed 40% tax on luxury items directed to state coffers. Some BJP-ruled states have echoed these concerns.

Experts warn that while consumption-driven states may benefit, debt-ridden ones like Punjab, Bihar, and West Bengal could face severe fiscal strain without support. Former Finance Secretary Subhash Chandra Garg said potential losses could touch ₹2 lakh crore, making this round of talks especially crucial.

PwC India’s Pratik Jain said the reforms could be rolled out soon, but balancing consumer relief with state finances will be the Centre’s toughest challenge.