Former West Bengal minister Amit Mitra has written to Union Finance Minister Nirmala Sitharaman, urging her to continue with the Goods and Services Tax (GST) compensation to states for another 3-5 years after it’s last month of applicability i.e. June, 2022. The extension of the compensatory arrangement will provide a big relief to the states.

He claimed that all states, across all political parties, decided to adopt GST on the condition that the Centre would compensate them for revenue loss for five years. The unforeseen battle against the pandemic has put the fiscal health of the states under huge stress. Also, the massive inflationary pressures have severely aggravated and impaired the economics of states.

Therefore, an extension of the compensation cess for a few more years may provide much-needed relief to the state finances.