Karnataka Says States to Lose ₹1.5 Lakh Crore from GST 2.0
Karnataka Revenue Minister Krishna Byre Gowda has warned that the new GST 2.0 structure could cost states between ₹1 lakh crore and ₹1.5 lakh crore in lost revenue. Speaking to NDTV, he said the changes would unfairly burden state governments.
Centre vs States: Who Bears the Burden?
According to Gowda, the Centre is projected to gain an additional ₹50,000–60,000 crore from the new tax setup, while states will see steep shortfalls. He added that there has been no assurance of compensation from the Centre to offset these expected losses.
Impact on State Finances & Federalism
Gowda cautioned that such a massive revenue gap could hurt fiscal stability, forcing states into dependency on the Centre. He described this as a blow to cooperative federalism, making state administrations weaker in managing their finances independently.
GST 2.0 Changes in Brief
The new GST framework, effective from 22 September 2025, reduced multiple slabs (5%, 12%, 18%, 28%) to just two standard rates: 5% and 18%. Ultra-luxury goods are taxed at 40%, while tobacco products remain in the 28% plus cess bracket. Essentials, electronics, and automobiles are among the sectors affected by the restructuring.
