Why blocked our GST compensation, states’ finance ministers ask Nirmala Sitharaman

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Published: December 4, 2019 12:32:01 PM

The finance ministers and other representatives from different states on Wednesday met finance minister Nirmala Sitharaman on several issues including GST compensation.

States have not received GST compensation since August.Punjab finance minister Manpreet Singh Badal has already said that the state would move Supreme Court if the central government Centre doesn’t release the pending Rs 4,100 crore GST component.

The finance ministers and other representatives from different states on Wednesday met finance minister Nirmala Sitharaman on several issues including GST compensation. The meeting comes at a time when various states are complaining that the central government has delayed compensating states for a shortfall in the GST revenues for August-September. The payment for the period was due in the month of October. Speaking to reporters after the meeting, Delhi finance minister Manish Sisodia said that the meeting was held with the union finance minister Nirmala Sitharaman to discuss why the centre has blocked states’ GST compensation. It is becoming difficult for the states to meet its expenditure under such circumstances, Manish Sisodia also noted. The union finance minister has assured the states that the issue will be resolved soon and she understands her responsibility in this matter, he added.

Punjab finance minister Manpreet Singh Badal has already said that the state would move Supreme Court if the central government Centre doesn’t release the pending Rs 4,100 crore GST component. On November 20, five states and union territories namely Kerala, West Bengal, Delhi, Rajasthan, and Punjab, had issued a joint statement on the issue.

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For any revenue shortfall below 14 per cent (base year 2015-16) for the first five years to 2022, the states are guaranteed by the central government in terms of compensation, according to the GST Act. In the April-November period, just above Rs 64,000 were collected by the central government in compensation cess, according to the central government data. In April-July, the government disbursed nearly Rs 48,000 crore, leaving Rs 18,784 crore assuming no payment has yet been made to states for August-September.

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