NEW DELHI: With the significant improvement in GST collection, states’ revenue is expected to expand by 10-12% in the coming months. Hence, as per finance ministry sources, the States need not depend upon compensation cess in near future.
“GST revenue collection has increased substantially in recent months. If the pace of monthly collection remains then States’ revenue will likely expand by 10-12%,” a top Government source told TNIE. He indicated the Centre’s reservation to extend the compensation cess scheme for another few years stems from the fact that GST collections are increasing on their own.
The GST collection in June was at `1.44 lakh crore, 56% more than the revenue in the same month of last year. This was the fourth straight month when the collection had been more than `1.4 lakh crore. Also, this was the fifth time when GST revenue surpassed `the 1.4 lakh-crore thresholds since the inception of GST in July 2017.
“May and June are not great months for high GST collection. Within the five years, GST is showing what it is... `1.4 trillion is the rough bottom line now for GST collection,” Finance minister Nirmala Sitharaman had recently said. When GST was implemented in 2017, the Centre had committed to compensating states for 5 years till June 30, 2022, for incurring losses on account of the new regime subsuming various state levies. Sitharaman during the press conference on the 47th GST Council’s decisions on June 29 had said few states wanted the compensation scheme to be extended by at least a few years, if not another 5 years.
A final decision on this would be taken in the next Council meeting on July 18, she had said. As many as 13 states have demanded an extension of the scheme by a few years. “We incurred huge losses in last 2 years due to Covid. We need compensation cess to make up for the losses,” Rajasthan minister Shanti Dhariwal had said.
GST collection goes up in recent months
GST collection in June was at Rs 1.44 lakh crore, 56% more than the revenue in the same month of last year. This was the fourth straight month when revenue crossed Rs 1.4 lakh cr. This was also the fifth time when GST revenue surpassed Rs 1.4 lakh cr mark since July 2017