GST compensation: Opposition-ruled states meet Nirmala Sitharaman, seek to release outstanding dues without further delay

The all-powerful GST Council may go for a detailed review of the tax structure after the rise in the revenue collections at its meeting on 18 December

FP Staff December 04, 2019 14:18:08 IST
GST compensation: Opposition-ruled states meet Nirmala Sitharaman, seek to release outstanding dues without further delay

Union Finance Minister Nirmala Sitharaman reportedly assured eight states, which are yet to receive the GST compensation from the Centre since August this year, that they will get their respective dues as early as possible.

On Wednesday, finance ministers and representatives of opposition-ruled states met Sitharaman and expressed their concern over the delay in releasing the Goods and Service Taxes (GST) compensation which has put them in an acute financial crisis, reported PTI.

The finance ministers of Delhi, Punjab, Puducherry and Madhya Pradesh and representatives Kerala, Rajasthan, Chhattisgarh and West Bengal attended the meeting over delay in payment of compensation.

Speaking to reporters after the meeting, Punjab Finance Minister Manpreet Singh Badal said that August and September compensation has not been released to states.

"We discussed that issue with the finance minister (Sitharaman). Even the compensation for next period (October-November) will be due now, so August-November. The government is under obligation to pay. The finance minister assured us that the compensation will be released as early as possible but she did not specify any timeline, " he said.

GST compensation Oppositionruled states meet Nirmala Sitharaman seek to release outstanding dues without further delay

Representational image. News18.

So far these states have not got compensation for the month of August and September and post 10 December, compensation for the period October-November will also be due.

Delhi Deputy Chief Minister Manish Sisodia said it is not that compensation fund does not have adequate money, around Rs 50,000 crore is there through cess collection.

"We thought we will make an appeal to Union Finance Minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India," Sisodia said after half an hour-long meeting.

Meanwhile, the all-powerful GST Council may go for a detailed review of the tax structure after rising revenue concerns at its meeting on 18 December, said a report in The Economic Times.

The revision on the tax structure is expected to include exempted items, GST and compensation cess rates and revenue augmentation measures even as the GST Council secretariat sought inputs from state governments on all these issues, said the report.

The GST Council is likely to discuss the revenue position in its upcoming meeting this month amid states demanding the release of pending GST compensation, reported PTI.

The meeting of the GST Council is expected to deliberate on a host of issues, including raising cess on some more products to meet the growing need of compensation cess, sources said.

This discussion is quite critical as lower GST and compensation cess collections have been a matter of concern in the last few months, sources said quoting a letter written by the GST Council to Commissioner, SGST of all states.

The compensation requirements have increased significantly and are unlikely to be met from the compensation cess being collected, it said.

The Council has sought suggestions, inputs or proposals as regards measures, on compliance as well as rates which would help in augmenting revenue.

"Specific suggestions may please be provided on following – review of items currently under exemptions, GST and compensation cess rates on various items, rate calibrations for addressing the inverted duty structure, compliance measures other than those currently under implementation and any other measure to augment revenue," it said.

The suggestions made will be placed before the committee for urgent examination, it said.

The GST Council is headed by Finance Minister Nirmala Sitharaman.

Last month, five opposition-ruled states had expressed concern over the delay in the release of GST compensation amid acute financial crisis in those states.

Accordingly, Kerala's is yet to receive GST compensation due of Rs 1,600 crore, Delhi's due stands at Rs 2,355 crore and Punjab is to receive Rs 4,100 crore while West Bengal's pending GST compensation amount is Rs 1,500 crore.

In a joint statement here, the finance ministers of Delhi, West Bengal, Punjab, Rajasthan and Kerala had said they were facing two months' delay in the payment of GST compensation by the Centre. These states have not received GST compensation since August.

With PTI inputs

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