Any revision in GST compensation framework would be betrayal of federal trust: Kerala FM Thomas Isaac

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Published: July 29, 2020 10:35 PM

The GST Council was slated to meet in July to discuss the compensation requirement of states, but the meeting has not been held so far.

 GST, GST framework revision, GST revised, GST compensation framework, Kerala, Finance Minister, Thomas Isaac, GST compensation payout, GST Compensation, GST Council, Goods and Services Tax, GST law, GST revenue, Punjab, Manpreet Singh Badal, Harsimrat Kaur Badal, pension scheme “According to news reports the hearing before Standing Committee on Finance, Centre has taken the stand that GST Compensation can’t be paid and present arrangements be revised by Council. Such a brazen betrayal of federal trust! Convene the Council meeting immediately as promised,” Isaac (above) tweeted. (File image)

Kerala Finance Minister Thomas Isaac on Wednesday said any change in the GST compensation payout framework would be a “brazen betrayal of federal trust”.

“According to news reports the hearing before Standing Committee on Finance, Centre has taken the stand that GST Compensation can’t be paid and present arrangements be revised by Council. Such a brazen betrayal of federal trust! Convene the Council meeting immediately as promised,” Isaac tweeted.

While there have been some reports on the issue, there has been no official confirmation that the Centre is looking to tweak the GST compensation framework.

The GST Council was slated to meet in July to discuss the compensation requirement of states, but the meeting has not been held so far.

The Centre had released over Rs 1.65 lakh crore in 2019-20 as GST compensation to states. However, the amount of cess collected during 2019-20 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 compensation payout amount was Rs 69,275 crore in 2018-19 and Rs 41,146 crore in 2017-18.

Under the Goods and Services Tax (GST) law, states are guaranteed to be paid for any loss of revenue in the first five years of the GST implementation from July 1, 2017.

The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.

On Tuesday, Punjab Finance Minister Manpreet Singh Badal, in response to a tweet by Union Minister Harsimrat Kaur Badal, had tweeted: “4 months of dues are still pending. April, May, June, and now July 2020. 4 months of pending dues is equivalent to 2 months of salary bill of all Punjab employees.”

In her tweet, Harsimrat Kaur Badal had said the Centre has cleared the entire pending GST compensation amount for Punjab by releasing Rs 12,187 crore for FY 2019-20, and urged the Amarinder Singh government to streamline the state’s fiscal situation and ensure shagun/pension scheme to all poor along with timely payments to employees.

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