Rajesh Dharmani Raises Himachal Concerns At Jaisalmer GST Council Meet

The 55th GST Council meeting, held in Jaisalmer, Rajasthan, under the chairmanship of Union Finance Minister Mrs. Nirmala Sitharaman, focused on several issues raised by states, including matters related to GST compensation, tax relief for specific sectors, and infrastructure development. The Himachal Pradesh delegation, led by Technical Education Minister Rajesh Dharmani, raised several concerns relevant to the state’s unique challenges.

Key Issues Raised by Himachal Pradesh:

1. GST Compensation for Hilly States:
   • Rajesh Dharmani emphasized the need for compensating Himachal Pradesh and other hilly states for the revenue loss due to the implementation of GST. He proposed an analogy with the Kyoto Protocol, suggesting that low carbon-emission states should receive compensation in a manner similar to the mechanism used for low-carbon emission countries. Additionally, he highlighted the importance of factoring in low population density as a compensatory factor.
2. CGST Notices on Toll Lessees:
   • Dharmani also raised the issue of Rs. 200 crore in demand notices issued by the Central GST (CGST) authorities to toll lessees in Himachal Pradesh. He argued that these notices should be annulled, stressing that the legal position did not justify such demands. He requested further clarification from the Council on the matter.
3. Exemptions for the Insurance Sector:
   • The Minister strongly advocated for the exemption of GST on individual health and term insurance policies, particularly those aimed at women, children, and senior citizens. He also called for GST exemption on research and development activities for the first 10 to 15 years, which would benefit both public and private entrepreneurs.
4. Disaster Resilience and Infrastructure:
   • During the pre-budget meeting, Dharmani emphasized the need for an Adaptation Fund to create disaster-resilient infrastructure in the state. He requested that the central government bear at least 50% of the cost for land acquisition for key projects like the Kangra Airport expansion and the Bhanupalli-Bilaspur and Chandigarh-Baddi railway projects. He suggested that these projects should be handled entirely by the central government, with Himachal being a border state with China.
5. Special Central Assistance (SCA) and Infrastructure Funds:
   • Dharmani urged the continuation and enhancement of Special Central Assistance (SCA) and the reduction of the cut in the Central Road Infrastructure Fund (CRIF). He pointed out that the CRIF allocation had drastically reduced from Rs. 11,140 crore in 2020-21 to Rs. 3,256 crore in 2025-26.
6. Ropeways under PMGSY Scheme:
   • The Minister requested that ropeways be included in the Pradhan Mantri Gram Sadak Yojana (PMGSY), which would help improve connectivity in the state’s difficult terrain. He also sought funds for the state share and maintenance costs for PMGSY works.
7. Skill Development and Education:
   • He called for the establishment of a Skill University in Himachal Pradesh with a focus on technical, vocational, and multidisciplinary education. He proposed specialized courses in Geometrics Engineering, Geo-sciences, Disaster Studies, and New Age Technologies to address local needs.
8. Protection for Apple Growers:
   • Given the importance of apple cultivation in Himachal, Dharmani requested an increase in customs duty from 50% to 100% on imported apples to protect the interests of local apple growers, who face stiff competition from imports.
9. Infrastructure and Urban Development:
   • The Minister suggested introducing new provisions under the Forest Conservation Act to allow the establishment of satellite towns in the state, emphasizing that this would require forest land diversion. He also pushed for increased funding for sewerage treatment facilities in rural areas and the establishment of Agro Parks to boost rural and agricultural development.

Outcome of the Meeting

The GST Council deliberated extensively on the issues raised by various states, including Himachal Pradesh. The Minister’s interventions on easing the tax burden on the insurance sector, GST compensation, and infrastructural demands reflect the pressing concerns of smaller and hilly states in the context of national policies. The Finance Minister assured that the raised issues would be looked into, and the recommendations from the meeting were expected to ease the compliance burden for businesses and benefit consumers across the country.

In addition to these issues, the council discussed broader measures for enhancing tax compliance and easing the business environment, signalling a move towards more streamlined and consumer-friendly GST policies.