The Himachal Pradesh government, during the 57th meeting of the GST Council on Thursday, raised the issue of full compensation for revenue implications arising from GST implementation to safeguard its fiscal stability.
The proposal for the constitution of a group of ministers on hilly states was reiterated. Furthermore, the state highlighted the need to correct rate inversion in the pharmaceutical sector by reducing tax rates on active pharmaceutical ingredients (APIs). The meeting, organised under the chairmanship of Union finance minister Nirmala Sitharaman at Bharat Mandapam, New Delhi, saw Himachal Pradesh reiterating that state revenues should be protected by ensuring a 14% year-on-year growth for five years, and thereafter, revenue protection should continue until the actual revenue of the state reaches the level of the protected revenue determined for the fifth year.
Such rationalisation would help minimise the inverted duty structure, reduce the accumulation of input tax credit and associated refund claims, and provide further impetus to domestic API manufacturing and the pharmaceutical industry, it said.
the state government also welcomed proposals providing relief to small taxpayers and measures relating to defence and CSD canteens While welcoming overall GST reforms. The state-specific issue concerning the leasing of the right to collect toll was also deliberated upon, and the proposed GST exemption relating to the state’s toll collection mechanism was welcomed.
