Centre in no position to pay GST dues to states: Report
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ECONOMY - July 29, 2020

Centre in no position to pay GST dues to states: Report

The Central government is in no position to pay the Goods and Services Tax (GST) share of states as per the current revenue sharing formula, finance secretary Ajay Bhushan Pandey reportedly told the Parliamentary Standing Committee on Finance, headed by BJP MP Jayant Sinha.

According to at least two members who attended the meeting, Pandey’s comments were in response to a question on the revenue shortfall due to the pandemic, reported The Hindu. Pandey apparently “pointed out that the GST Act has provisions to rework the formula for paying compensation to the state governments if the revenue collection drops below a certain threshold,” the report said citing one of the members of the panel on condition of anonymity.

The finance ministry on Monday said it has released over Rs 1.65 lakh crore as GST compensation to states for 2019-20 financial year, including Rs 13,806 crore for March. “Taking this amount into account, entire compensation up to 2019-20 has been released to states,” the ministry had said in a statement.

The total amount of compensation released for 2019-20 is Rs 1,65,302 crore whereas the amount of cess collected during the year was Rs 95,444 crore.

​To release the compensation for 2019-20, the balance of cess amount collected during 2017-18 and 2018-19 was utilised. 

The COVID-19 pandemic has further deepened the country’s economic slowdown, impacting the government’s revenues, with the Goods and Services Tax (GST) collections recording a 41 per cent decline in the April-June quarter. With coffers drying up, the GST compensation has become a bone of contention for the Central and state governments. 

States have for long been complaining about delays in getting their assured compensation.

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