Centre sacrificed large sum of GST revenue to compensate states: Former CEA

The Centre has sacrificed a large portion of revenue from Goods and Services Tax (GST), up to 1 per cent of GDP, every year since the rollout of the new indirect tax regime to fund a 14 per cent compensation guarantee provided to states, former Chief Economic Advisor Arvind Subramanian said on Thursday.

Subramanian, who was actively involved in the implementation of the GST regime, also said that it would not be advisable at this point in time to bring petrol and alcohol under the GST.

GST was rolled out on July 1, 2017, subsumed 17 taxes and 13 cesses into a 5-tier structure, thereby, simplifying the tax regime.

Addressing an event organised by the Centre for Social and Economic Progress(CSEP), Subramanian further said that the GST is a remarkable reflection of cooperative federalism and a counterexample to the narrative of fiscal centralisation by the Centre in the last decade.

Subramanian, currently a senior fellow at Peterson Institute for International Economics, said that the