PUDUCHERRY: Puducherry government has urged the central government to extend the GST Compensation period beyond June 2022 by another five-year period for small States and UTs.
Puducherry being a small UT with a smaller consumption base and not bestowed with any natural or mineral resources, the revenue loss has to be made good either by compensation or by additional Central Assistance, said Puducherry PWD minister K. Lakshminarayanan at the GST council meeting on Friday.
After implementation of GST, the UT of Puducherry is suffering revenue loss due to structural issues in GST viz., destination principle. Due to the uniform tax rate of GST Puducherry market is no more attractive for the people of the neighboring states, he said.
If Puducherry had continued with VAT, 7% growth would have fetched Rs.1536 crore in 2020-21 as against Rs.667 crore revenue from GST. Though various measures are taken for augmenting the revenue collection, Puducherry had a 62% revenue loss for 2020-21 due to structural issues.
The revenue loss sustained by Puducherry is being made good by GST Compensation released by the Central Government. Once, GST Compensation comes to an end by June 2022, Puducherry UT is posed for a financial crisis.
He pointed out that Puducherry has not yet been included in the Central Finance Commission(CFC) and the UT Government is deprived of the funds from Central devolution by CFC. Moreover, the Central Assistance to the UT through the Ministry of Home Affairs has a declining trend and for the current year, 2021-22 UT has got only 1.58% more than the previous year.
While thanking Union Finance minister Nirmala Sitharaman for having released a back-to-back loan of Rs.517 crore to this UT for the current year 2021-22 and Rs.121.65 crore as GST compensation for 2020-21, he hoped that the balance compensation for the current year 2021-22 would also be released to the states in a timely manner along with previous year balance compensation said Lakshminarayanan.