Karnataka Government's Claims Are Wrong And Mischievous: Fin Min On Tax Devolution Row

Finance Ministry has reacted to the claims of discrimination by Karnataka government. MPs and MLAs of the state's ruling party staged a protest in the national capital today

Outlook Business Desk

Updated on: 7 February 2024 8:05 pm

The finance ministry responded to Karnataka government's claims of discrimination in sharing central taxes, saying that the claims are wrong and mischievous. The response comes hours after the state Congress staged a protest in the national capital.

In a statement, the finance ministry said, "There are factual errors, false monetary claims, misleading statements, and selective mention of certain losses allegedly suffered without mentioning of the gains that have accrued to the State in the 15^th Finance Commission (FC) period."

Also Read| Why Karnataka Government Is Protesting Against Centre

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The ministry argued that the state received over Rs 1.5 lakh crore as tax devolution during the award period of 14th finance commission between 2015-16 and 2019-20. In the current period, whose award was decided by the 15th FC, the state has so far received Rs 1.29 lakh crore with two years still left. In the interim budget for 2024-25, the government has estimated a release of Rs 44,485 crore. The total would rise to Rs 1.74 lakh crore in five years.

"In short, despite the exceptional circumstances arising from the pandemic which depressed Central revenues, Government of Karnataka will be getting substantially more as devolution during the first five years of the 15^th FC period than in the 14^th FC period," the ministry said.

Responding to the allegation of increasing cess and decreasing share of state's revenue pool, the finance ministry statement said that Karnataka government did not mention the fact that large part of cess collection comprises of GST compensation cess which entirely goes to states.

The finance minister also debunked claims of huge dues of GST compensation. "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 GST (Compensation to States) Act, 2017," the finance minister said.

Karnataka CM Siddaramaiah had said that the 15th finance commission had caused injustice to the state in its devolution formula.