Friday 10 July 2020

GST compensation of August and September still outstanding: Manpreet Badal

- Posted on 20 November 2019

Punjab Update

Chandigarh, November 20: Finance Ministers of the States of West Bengal, Kerala, Delhi, Rajasthan and Punjab appealed to the Union Finance Minister to release the GST compensation without any delay.  Finance Ministers of these States including Punjab FM Manpreet Singh Badal attended the meeting of the Empowered Committee of State FMs at New Delhi Today.

            In a Joint statement they said,“GST compensation for the month of August and September, required to be paid by the Central Government, sometimes in October, continues to be outstanding till date. No explanation what so ever has been furnished for this delay of nearly one month. As a result states are facing acute pressure on fiscals, some already resorting to ways and means or even overdrafts.”

            They said, GST comprises nearly 60% of the tax revenues of the states. Many states are already facing deficits up to 50% of the total GST. Such huge deficits have potential to disrupt the budget and planning processes in a host of areas literally bringing activities of the states to a grinding halt.

            It was recalled that the assurance of GST compensation was necessary enabler in states agreeing to subsume their fiscal sovereignty into GST. This was preceded by long deliberations within the Empowered Committee where many states have apprehensions about being able to attain uninterrupted compensation. It was only after the required provisions for compensation were incorporated in the constitution that states agreed to join the GST.

            “The Current delay has shaken the confidence of the states who have so far supported the GST in spirit of rare bonhomie. Despite many challenges from time-to-time States have extended their support to all the major decisions of the GSTC”, they added.

            State FMs appealed to the union FM to look into the matter personally and release the compensation without any further delay. FMs also suggested that the matter should be placed on the agenda of the next meeting of the GSTC and a healthy mechanism be evolved to provide compensation in future with due urgency and judiciousness.

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