TN asks Centre to continue GST compensation citing increased fiscal burden

The Tamil Nadu government on

Thursday urged the Centre to expedite release of Rs 12,258.94 crore, which is its Goods and Services Tax (GST) arrears from the latter since 2018-19 and the outstanding Integrated GST of Rs 4,073 crore for the 2017-2018 fiscal.

Also, in view of COVID-19, which has imposed a fiscal burden on Tamil Nadu in terms of scaling up the medicare infrastructure for treatment and improving the health of the people, the Centre should continue with the GST compensation currently being enforced, the government said.

This measure should continue so as to ensure the states do not suffer a setback on the fiscal front, D Jayakumar, Minister for Fisheries, Personnel and Administrative Reforms, who participated in the 41st meeting of the GST council on Thursday via video conference, demanded.

The meeting was headed by Union Finance Minister Nirmala Sitharaman.

At present, Tamil Nadu is cutting back on other expenditure to carry out COVID-19 preventive measures and is unable to give up the state's financial resources.

"Tamil Nadu's fiscal burden has increased owing to the coronavirus pandemic and the crisis necessitated curtailment of other expenditures to cope with the present situation," Jayakumar said.

Further release of the state's financial resources could have a serious impact on the implementation of welfare schemes for the poor and downtrodden, he stressed and demanded that the states continue to receive GST compensation.

The Goods and Services (Compensation to States) Act, 2017 was enacted by the Central Government to compensate the loss of revenue to the states in order to implement the GST system.

According to the law, the central government has paved the way for the states to be compensated for five years at a growth rate of 14 per cent with the financial year 2015-2016 as the base year.

The Centre is currently levying a cess in order to compensate states, he pointed out.

"The central government has the full responsibility to find other sources of revenue to augment the upper tax package in order to continue to provide compensation to the states."

"If necessary, the Central government should come forward to ensure further legislation to extend the deadline for levying GST compensation surcharge to more than five years," Jayakumar said.

In addition, the Centre must provide loans or advances to the GST surcharge fund to provide GST compensation to the states.

This loan can be repaid, Jayakumar said and urged that the GST Council should make the above recommendation to the Central Government.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel