Odisha May Lose Rs 1,000 Crore Monthly if GST Slabs Cut

Bhubaneswar : The Goods and Services Tax (GST) Council will meet on September 3 and 4 to consider a major reform—reducing the current four-slab tax system to just two. While the move could simplify India’s indirect tax regime, it has sparked concerns among several states about potential revenue losses.

 States Fear Decline in Collections

An assessment suggests that if slabs are reduced, states could lose up to 20% of their GST collections. For Odisha, which currently collects around Rs 5,000 crore every month, this may mean a shortfall of nearly Rs 1,000 crore monthly, affecting development and welfare spending.

Opposition States to Raise Issue

Finance ministers from eight opposition-ruled states, including Karnataka, Kerala, Tamil Nadu, West Bengal, and Punjab, have decided to raise the issue strongly in the Council. They demand clarity on whether the Union government will provide a new compensation mechanism.

Odisha’s stand remains unclear. However, Chief Minister Mohan Charan Majhi, while speaking at the *Developed Odisha 2026* conclave, said that reduced GST could benefit consumers, boost manufacturing, and create jobs. He did not comment on compensation.

Odisha’s Compensation History

Between 2017–18 and 2022–23, Odisha received nearly Rs 16,165 crore in GST compensation, including Rs 5,332 crore in 2019–20 alone. For 2025–26, the state expects around Rs 3,000 crore. However, no compensation was released in 2021–22 and 2022–23, raising doubts about future assurances.

Key Question Ahead

As the Council prepares for its September meeting, the challenge will be balancing reform with fiscal stability. While simplification may improve compliance, states fear it could weaken their financial position without a robust compensation plan.