Opposition states point up a Rs 2 lakh crore income risk and demand compensation for the GST rejig.

Opposition-ruled states demanded a clear compensation system on Friday, claiming that the Center's proposal to restructure the Goods and Services Tax (GST) rates could result in losses of between Rs 1.5 and Rs 2 lakh crore. On September 3 and 4, they intend to bring up the matter at the GST Council meeting.To create a joint proposal, the finance ministers of West Bengal, Tamil Nadu, Telangana, Kerala, Punjab, Jharkhand, Karnataka, and Himachal Pradesh convened. In order to offset income loss, they recommended levying an additional tax on luxury items and sin in addition to the proposed 40% rate. They claimed that the governments ought to receive a portion of the profits.

Under the new arrangement, states may lose 15–20% of their GST earnings, according to Karnataka Finance Minister Krishna Byre Gowda. He added that states should receive compensation for five years until revenues stabilize, stating that the 20% loss in GST revenue would "seriously destabilize the fiscal structure of state governments across the country."According to Byre Gowda, the revenue-neutral rate (RNR) was 14.4% during the GST launch and then dropped to 11% following rationalization. He cautioned that the Center's plan to lower rates and slabs might further lower the net rate to 10%. "The revenue interest of the states should be safeguarded." People will suffer, development efforts will be hampered, and state autonomy will be weakened if there is a significant decline in state government revenue, he said.The Center has proposed replacing the present four slabs of five, twelve, eighteen, and twenty-eight percent plus cess with a two-slab structure of five and eighteen percent. Only sin and ultra-luxury goods would be subject to a 40% tariff.