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Congress raises issue of delayed GST compensation payment to states

Raising the issue through a Zero Hour mention, Pratap Singh Bajwa (Cong) said states gave up the right to levy taxes in the interest of 'one-nation-one-tax' regime of GST.

November 27, 2019 / 12:52 PM IST

The Congress on Wednesday raised in Rajya Sabha the issue of the Centre delaying payment of compensation to states for revenue shortfall in the Goods and Services Tax (GST) since August, saying this may lead to stoppage of development work and payments to employees.

Raising the issue through a Zero Hour mention, Pratap Singh Bajwa (Cong) said states gave up the right to levy taxes in the interest of 'one-nation-one-tax' regime of GST.

When the GST subsumed 17 different central and state levies in July 2017, states were assured that they will be compensated for any loss of revenue vis a vis pre-GST position, for the first five years of the introduction of GST.

Bajwa said initially the compensation was to be paid on a monthly basis and later once in two months.

But the compensation for August, September and October has been pending and it is end November with no sight of when it will be paid, he said.


Punjab, he said, is to receive Rs 2,100 crore in GST compensation and together with Rs 2,000 crore arrears its total dues are Rs 4,100 crore.

Delays in payment is "grossly unfair" for small states as it may "stall development work and payment of pensions," he said.

Last week, five non-BJP ruled states had raised concerns over delay in payment of GST compensation by the Centre, resulting in pressure on their finances, as GST comprises significant chunk of revenues for state governments.

In a joint statement issued after the meeting of the Empowered Committee of State Finance Minister in Delhi last Wednesday, finance ministers of West Bengal, Kerala, Delhi, Rajasthan and Punjab had stated that the GST compensation since continues to be outstanding.

GST comprises nearly 60 per cent of tax revenues of states. Many states are already facing deficits up to 50 per cent of the total GST.

As a result, states are facing acute pressure on fiscals with some already resorting to ways and means or even overdrafts, the finance ministers had said.

Bajwa said no explanation has been furnished for the delay in payment of compensation.

He asked Finance Minister Nirmala Sitharaman to look into the matter and release the compensation without further delay.

Through a separate Zero Hour mention, Manas Ranjan Bhunia (TMC) said GST collections have fallen short of Rs 1 lakh crore target.

While everyone was for introduction of GST, it was warned that hasty implementation will create "turbulent economic situation", he said.

The Centre's compensation to states for revenue shortfall in GST collections has been delayed as the amount in compensation cess fund has dried up due to poor collections.

The Constitution Amendment Bill guarantees compensation to states in the first five years of GST rollout.

The Central government has projected its GST revenue in 2019-20 (Apr-Mar) at Rs 6.63 lakh crore, up 13.6 per cent from the Rs 5.84 lakh crore collected in 2018-19.
first published: Nov 27, 2019 12:43 pm

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