Finance Minister Criticizes Karnataka Government’s Assertions as Inaccurate and Misleading in Tax Devolution Dispute
The finance ministry has refuted the Karnataka government’s allegations of bias in central tax sharing, terming them as incorrect and misleading. This response follows a protest by the state Congress in the national capital.
According to a statement from the finance ministry, there are inaccuracies, unfounded financial assertions, deceptive remarks, and a deliberate omission of certain gains supposedly incurred by the state during the 15th Finance Commission (FC) period.
The ministry contended that the state had been allocated more than Rs 1.5 lakh crore as tax devolution during the 14th Finance Commission’s award period from 2015-16 to 2019-20. In the ongoing period, governed by the 15th Finance Commission’s award, the state has already received Rs 1.29 lakh crore, and an additional Rs 44,485 crore is estimated for the interim budget of 2024-25, bringing the total to Rs 1.74 lakh crore in five years.
“In summary, despite the unusual circumstances stemming from the pandemic, which impacted Central revenues, the Government of Karnataka is slated to receive significantly more in devolution during the initial five years of the 15th Finance Commission period than it did in the 14th Finance Commission period,” stated the ministry.
Addressing the accusation of raising cess and reducing the state’s revenue share, the finance ministry clarified that the Karnataka government failed to acknowledge that a significant portion of cess collection constitutes GST compensation cess, which is entirely allocated to the states.
The finance minister further refuted the assertion of substantial GST compensation arrears, stating, “The Government of Karnataka has made a blatantly false statement, as though Rs 1.65 lakh crore is due as GST compensation. It has ignored the fact that the compensation arrangement in GST was for 5 years. Compensation to the States for GST is provided under the GST (Compensation to States) Act, 2017.”
Karnataka Chief Minister Siddaramaiah asserted that the 15th Finance Commission had unfairly treated the state in its devolution formula.