Centre’s stand: Extension of GST aid to states not viable

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Published: September 20, 2019 5:50:00 AM

A number of states have represented to the 15th Finance Commission that the Centre should pay them compensation for three years more to ensure that their GST revenue continues to grow 14% year-on-year, as guaranteed in the Constitution.

Centre stand, Extension, GST aid, states not viable, Finance Commission, GST, GST council, economy newsThough the decision to extend the period is beyond the remit of the Finance Commission, states are hoping that it can impact the GST Council.

Tax officials of the Central government are said to have told state government counterparts that any extension in the period for which Centre is liable to pay compensation to states is unviable. Their meeting took place a day prior to the 37th GST Council meet here on Friday.

A number of states have represented to the 15th Finance Commission that the Centre should pay them compensation for three years more to ensure that their GST revenue continues to grow 14% year-on-year, as guaranteed in the Constitution. The Constitutional provision for compensation is only till 2022 while states want it extended till 2025.

Though the decision to extend the period is beyond the remit of the Finance Commission, states are hoping that it can impact the GST Council.

However, one official said any such decision would require a Constitutional amendment which made it unlikely. Further, he said the guaranteed GST revenue growth was already ambitious and for a comfortable period.

Another official said while compensation pool was just about sufficient as of now, if the revenue collection continues to grow slowly, it could hit the compensation cess fund.

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