State Finance Chiefs Demand Fundamental GST Overhaul Amid Centralization Concerns

Eight years after implementation, India's Goods and Services Tax (GST) system faces mounting calls for structural reform from state-level financial authorities. Telangana's Deputy Chief Minister and Kerala's Finance Minister have jointly highlighted systemic imbalances, noting states' growing fiscal dependence on the central government. Their critique emerges shortly after the GST Council's most significant rate rationalization, which they argue lacked proper examination of revenue impacts. The ministers specifically identified the GST Council Secretariat—currently composed exclusively of central government representatives—as a critical flaw, arguing that the absence of state members undermines collaborative federalism. This structural deficiency, they contend, has led to decisions being made without adequate assessment of their financial consequences on state economies. The timing of these statements, following major rate adjustments, suggests deepening state-level discontent with the GST's operational framework. Analysts observe that these concerns reflect broader tensions in India's fiscal federalism, where states seek greater autonomy in revenue matters. The call for reform signals potential challenges ahead for achieving consensus in the GST Council, as states push for more substantive involvement in the tax system's governance and decision-making processes.