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Opposition-ruled states press for immediate release of GST compensation fund

This year, states and three UTs were paid Rs 28,000 crore for the June-July period and they are yet to be paid for the August-September and October-November periods.

Published: 05th December 2019 11:46 AM  |   Last Updated: 05th December 2019 11:46 AM   |  A+A-

FM Nirmala Sitharaman with finance ministers of opposition-ruled states | PIB

By Express News Service

NEW DELHI: Faced with an acute pressure on their fiscals, representatives from opposition-ruled states and one Union Territory (with assembly) — Punjab, Rajasthan, Madhya Pradesh, Delhi, West Bengal, Kerala and Puducherry — met Finance Minister Nirmala Sitharaman on Wednesday.

The states have pressed the need for the immediate release of GST Compensation Fund which they get from the Centre in lieu of revenue shortfall.

This situation assumes significance because states and UTs with Assemblies are guaranteed compensation if the GST revenue growth is less than 14 per cent. This year, states and three UTs were paid Rs 28,000 crore for the June-July period and they are yet to be paid for the August-September and October-November periods.

States claim total dues could be Rs 50,000 crore or even more. Among these states, Punjab has owed Rs 2,100 crore as compensation, while arrears stand at Rs 2,000 crore. The outstanding GST compensation to Delhi stands at Rs 2,355 crore, followed by Kerala (Rs 1,600 crore) and West Bengal (Rs 1,500 crore).

“Such huge deficits have the potential to disrupt the budget and planning processes in a host of areas literally bringing activities of the states to a grinding halt,” the states said in a joint statement.

The Central government has admitted to stress on GST collections and the next GST Council meeting scheduled for December 18 may see some tough-talking.

Earlier, the GST Council had written to the states stating GST and compensation cess collections in the past few months have been a “matter of concern” and that the GST revenue position shall be discussed in detail in the next meeting. “The compensation requirements have increased significantly and are unlikely to be met from the compensation cess being collected,” the letter added.

A GST Compensation Cess of 1 per cent to 25 per cent is levied on the supply of certain goods and services, as recommended by the GST Council to finance the compensation cess.



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