Under Heavy Criticism, Centre Finally Releases Rs 35298 Cr GST Compensation To States

Image : Representational Purpose Only

Image : Representational Purpose Only

Facing flak over delay in payment of GST compensation, the central government has finally released Rs 35,298 crore to states to make up for the loss of revenue due to rollout of the Goods and Services Tax (GST).

When GST was rolled out on July 1, 2017, states were through legislation promised to be compensated for the loss of revenue as not just their taxes such as VAT were being subsumed in the new levy but also their right to levy taxes was being snatched.

The compensation amount was fixed at 14 per cent on top of revenue in the base year of 2016-17. The corpus for paying compensation was collected by levying a cess on top of GST rates on tobacco products, cigarettes, aerated water, automobiles, and coal.

This compensation was to be released after every two months but the same was pending since August, drawing protests from states, particularly non-BJP ruled ones.

“The central government has released GST compensation of Rs 35,298 crore to States and Union Territories today,” the Central Board of Indirect Taxes and Customs (CBIC) said in a Twitter post.
This comes just days before the 38th meeting of the GST Council – the highest decision-making body of the new indirect tax regime – on December 18, where the opposition-ruled states had planned to again raise the issue of delayed payments.

Opposition-ruled states such as Punjab, West Bengal and Kerala have since last month upped the ante for the immediate release of GST Compensation Fund. Their finance ministers had also met Union Finance Minister Nirmala Sitharaman and the issue came up during the just-concluded Winter Session of Parliament.

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