AMN / New Delhi
Union Finance Minister Nirmala Sitharaman has rejected the allegation of discrimination with non-BJP ruled states over the issue of GST compensation.
Sitharaman said Modi government was committed to the principle of cooperative federalism and will honour dues of the states.
She said, no states have been given the compensation since August and Centre will honour the commitment made to the states with regard to GST compensation.
The Minister said this while replying to a discussion on Appropriation (No 3) Bill, 2019 in the Rajya Sabha today.
She said, IGST dues pertaining to 2017-18 were discussed in the GST council and a Group of Ministers has been formed to look into the issue.
Ms. Sithraman said, the Centre has released 9,783 crore rupees to the states which are more than the total GST cess collection received till 31st October.
After the Minister’s reply, the Rajya Sabha returned the Appropriation (No 3) Bill, 2019 to Lok Sabha. The Bill is related to issuing of additional government expenditure of over 21,246 crore rupees in the current fiscal. It is the first batch of Supplementary Demands for Grants for 2019-20.
Several members including Jairam Ramesh of Congress, KK Ragesh of CPI (M), Manish Gupta of TMC and others participated in the discussion.
She said the compensation is paid to the states out of cess levied on five products. The compensation is paid keeping 2015-16 revenues of the states as the base and guaranteeing 14 per cent addition on top of it every year.
GST cess collection in 2017-18 — the first year of GST implementation — was ₹62,596 crore, out of which ₹41,146 crore was released to states.
The balance ₹15,000 crore was accumulated, she said, adding in the subsequent year, GST collection was ₹95,081 crore and ₹69,275 crore was released to states.
In the current fiscal, ₹55,467 crore was collected till October 31, 2019 and ₹65,250 crore paid to states.
“There was excess payment of ₹9,783 crore” during the current fiscal, she said adding the dues of the states will be honoured.
She, however, did not reply to a pointed question from CPM’s K K Ragesh on when the dues will be cleared.
Sitharaman said all states and not just non-BJP ruled states have not been paid compensation since August.
On the issue of states not getting their due share from Integrated GST, which is levied on the transfer of goods from one state to another, the minister said no state claimed I-GST dues in 2017-18 but in the subsequent year it has been paid.
Claims were subsequently made and a group of state ministers has been set up to look into divisibility of the IGST revenue for 2017-18 and the matter will be put up before the GST Council – the highest decision making body of the indirect tax regime, no sooner the report of the group is presented, she said.
After her reply, Rajya Sabha approved additional spending of over ₹21,000 crore by voice vote. Lok Sabha had previously given its nod for such expenditure.
During the debate, Congress leader Jairam Ramesh said states have not been paid their GST compensation for four months. This delay together with the economic slowdown is adversely impacting state finances, he noted.
He quoted a letter written on the subject by Kerala Finance Minister Thomas Issac to Sitharaman to say that this non-payment constitutes a dispute between the Centre and the states but the GST law passed by the Parliament in 2017 does not provide for a dispute resolution mechanism.
The draft legislation Congress-led UPA had brought for GST had dispute resolution provision, he said.
“We have reached a stage where we have a serious dispute,” he said, adding that . the “first element of cooperative federalism is fulfilling your promises, fulfil what law has been passed”.
According to him, the states are guaranteed 50% of the I-GST revenues but haven’t been paid. “The central government is sitting on a corpus of ₹1 lakh crore, of which 50% is law mandated share of states but it is not being shared with states,” he added.
Sitharaman, however, said there is no dispute between the Centre and the states over GST compensation payment as the Centre has not declined to recognise the share of the states.
Ramesh also said the state finances will deteriorate further with implementation of upcoming 15th Finance Commission recommendations as it may not give states the bonanza that the previous panel on sharing of tax revenues between centre and states had offered.
Ramesh said GST compensation is to be paid at the end of every two months but non-BJP ruled states such as Kerala, Madhya Pradesh, Rajasthan, Chattisgarh, West Bengal, Delhi and Punjab have not been paid. “You are taking it as an opportunity to push non-BJP states into financial crisis,” he added.