Lower GST growth: CM urges Centre to compensate States for loss of revenue

Welcoming the reduction of GST rates in the 56th GST Council, Chief Minister Siddaramaiah on Friday said the growth of gross GST collection during September to November 2025 has slowed down to 3.3% as against 9% in the corresponding period of the previous year, following rationalisation of tax rates.

Acting in faith

In a letter to Prime Minister Narendra Modi, the Chief Minister said “States have acted with complete faith and in full spirit of cooperative federalism by accepting the Centre’s rationalisation proposals in their entirety”, and demanded compensating the State for the revenue loss.

Mr. Siddaramaiah said the actual net domestic GST growth rate for the country had registered a 1.7% year-on-year in growth for the three months affected by rationalisation (September to November) as against a healthy growth rate of 8.9% in the corresponding period of the previous year. “This is a huge 7% decline in the post rationalisation of taxes. If the same trend continues for the remainder of the year against estimated net GST collection of ₹15.5 lakh crore (10% growth rate as of the previous year), we may register a collection of ₹14.6 lakh crore, which is a short fall of ₹85,000 crore for the current year alone,” he said.

Severe reduction

“Karnataka GST numbers also reflect this pattern of severe reduction in GST collections. The State recorded a 3.1% growth rate in net GST collection from September to November, and based on current trends, we foresee a revenue shortfall of ₹5000 crore this year. For 2025-26, this translates into a ₹9000 crore shortfall,” Mr. Siddaramaiah said in the letter

This excluded the additional loss of approximately ₹9,500 crore due to the non-merger of the compensation cess, the Chief Minister said.