Shimla: Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu, who met Union Finance minister Nirmala Sitharaman in New Delhi on Wednesday, informed that the recent rationalisation of the Goods & Services Tax (GST) structure has hit the state hard, reducing the state’s tax base, one of the state’s primary revenue sources.
He asked the Union minister to adopt a liberal approach toward providing financial assistance and grants to the state facing a severe resource crunch due to a reduction in grants, tax collections, and losses caused by natural calamities.
The chief minister said the state is dependent on its tax base for revenue,
alongside centrally provided grants, and any move to tamper with the funding pattern could make the state suffer heavily.
In September 2025, the Centre had simplified the GST slabs of 12 per cent and 28 per cent to 5 per cent and 18 per cent, but the shift had led to a sharp reduction in effective tax rates on many goods and the ending of the compensation cess that helped protect state revenue in earlier years.
“Himachal’s own revenue mobilisation is limited compared to large states; GST receipts and other tax collections form a
significant share of its operating revenue,” the Chief Minister lamented.
He said, considering the current financial situation, the Centre is requested to increase the additional borrowing limit of the state by 2 per cent for the remaining period of the financial year 2025–26.
The state’s financial health has been severely impacted due to regular reductions in revenue deficit grants and losses incurred due to natural disasters over the past three years, Sukhu explained.