Reduction in GST rates will 'disproportionately' hit states' finances: Owaisi

Hyderabad: States are expected to suffer loss in their tax receipts to the tune of Rs 8,000 crore to Rs 10,000 crore due to Goods and Services Tax (GST) rate cuts which will "disproportionately" hit their finances, AIMIM president Asaduddin Owaisi said on Thursday.

Addressing a press conference, the Hyderabad MP alleged that the Union government "failed" to mention the compensation mechanism for the revenue loss that states may face after implementing the new GST reforms.

The GST Council on September 3 approved a two-rate structure -- 5 and 18 per cent -- a move that will bring down the prices of a large number of items. The revised structure will be in force from September 22.

"The reduction in GST...I feel it will disproportionately hit the states' finances. We cannot welcome this decision because it will have a huge impact on the states’ revenues and finances...Every state is going to face a loss of revenue of Rs 8,000-Rs 10,000 crore. What will be the compensation mechanism for them? There is no mention about it," he said, adding the states don't get share in cess and surcharges.

Asked on the argument that, due to the rate rationalisation, more money is being put in peoples' hands and consumption will increase leading to more tax collection, Owaisi dismissed it as "rhetoric and dialogues" which are being seen in the past 11 years and that they have not helped the common man.

Replying to a query on former BRS leader K Kavitha, the AIMIM chief said he respects KCR. "BRS party is nothing without KCR," he said.

A day after her suspension from KCR-led BRS, Kavitha on September 3 announced her resignation from the party and trained her guns against cousin and former minister T Harish Rao.

Kavitha, daughter of party founder and former Telangana Chief Minister K Chandrasekhar Rao (KCR), also announced quitting as Member of the Legislative Council and indicated there was "pressure" on her father to act against her.