At a time when the government is looking at additional resource mobilisation measures to boost goods and services tax collections, some states have cautioned Finance Minister Nirmala Sitharaman against tinkering with the GST rate structure.

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West Bengal Finance Minister Amit Mitra, in a letter to Sitharaman on December 16, stated that the current review of items under the exemption category for shoring up revenues is "alarming".

He also said the items under exemption category "are integrally connected with the daily life of common people" and any tinkering with the exemption list would undo the hard work of the GST Council.

I urge you to desist from pruning the GST exemption list, Mitra said.

According to a copy of the letter reviewed by CNBCTV18, Mitra stated that the proposal to increase 5 percent GST rate to 6 percent “will be hugely inflationary and further worsen the macro-economic situation for common consumers."

Mitra also noted that most of the items in this category are goods for mass consumption.

"GST Council through wider consultations and deliberations brought down the rates of as many as 183 items from 28 percent to 18 percent. In my view, imposing cess on any of these items would be highly regressive," Mitra said in the letter.

He also added that if such a move happens then "it will also start a dangerous trend of imposing cess on goods and services arbitrarily as a means to increase revenues in desperation."

Mitra further cautioned Sitharaman that any tinkering with GST slabs and items during the current difficult economic phase will be "highly detrimental and hugely counter-productive"

On the contrary, Mitra suggested that the government should further simplify GST processes and procedures for better revenues. "The solution of additional resource mobilisation lies not in tinkering of rate structure but in focusing on anti-evasion and fraud detection," the letter reads.

Mitra, taking cognizance of the current macro-economic data, highlighted that "consumers are going through the most distressing times with stagflation knocking at our door", thus any step taken, should be well thought out.

It may be noted that 8 states -- West Bengal, Delhi, Madhya Pradesh, Chattisgarh, Kerala, Pudducherry, Punjab and Rajasthan -- also wrote to Sitharaman urging her to urgently release the pending compensation dues of over four months.

Delhi Deputy CM and Finance Minister Manish Sisodia, in the letter, said, "The current due to Delhi from the government of India on this account is about Rs 3698 crore...Considering the urgency of the situation, I humbly request you to discuss the release of compensation to states on account of shortfall in GST revenue collection be taken up as Agenda No2 immediately after the confirmation of the Minutes in the 38th GST Council Meeting scheduled for 18th December, 2019."

Hours after the state FMs writing to Sitharaman, Union Finance Ministry through a tweet said it released Rs 35,298 crore to states and union territories. The amount released is for two months, August and September.

The Centre still has to pay states and union territories compensation due to shortfall in GST revenue collections for October and November, 2019.

First Published:Dec 16, 2019 7:46 PM IST