GST compensation cess but one-fifth of the entire deficit, Maharashtra most affected
The Finance Ministry says that in Maharashtra, Karnataka, UP, Gujarat, and Tamil Nadu, GST collection has fallen the foremost. Three BJP-ruled states have agreed to require a loan to hide the deficit. The Finance Ministry on Monday informed Parliament that the compensation cess collected within the current fiscal year is a smaller amount than one-fifth of the entire amount that states are to be compensated as Goods and Services Tax (GST).
The total amount of compensation cess raised from April to August was 28,163 crore. But at an equivalent time the reduction in GST collection – That states are compensated – only between April and July, was 1.51 lakh crore. This information has come from the info given by the Finance Ministry, in response to several questions asked about GST within the Lok Sabha.
GST compensation Maharashtra
In one among its responses, the ministry said, “GST compensation cess charged within the current fiscal year 2020-21 isn’t such a lot that GST compensation can’t be issued for the amount April-July 2020″.
The ministry has attributed the decrease in GST revenue to shrinking of GDP, nationwide lockdown to affect COVID – 19, and increasing the deadline for filing GST returns.
Maharashtra, Karnataka, Uttar Pradesh, Gujarat, and Tamil Nadu saw the most important decline in GST collections between April and July.
Maharashtra was to receive Rs 22,485 crore as GST compensation, followed by Karnataka with 13,763 crores, Uttar Pradesh with 11,742 crores, Gujarat with 11,563 crores, and Tamil Nadu with Rs 11,269 crore. West Bengal, Kerala, Delhi, and Punjab are the opposite states where the deficit is between Rs 6,500 crore and Rs 7,800 crore.
The center-states quarrel over outstanding GST
GST payback of compensation has been the topic of controversy over the past few months, and lots of anti-state governments have called the dismantling of compensation an example of overwhelming federalism. Many nations have written to the Prime Minister that this compensation is their constitutional right and that they should catch on.
He suggested that to satisfy the deficit of compensation, the central government should borrow. But the central government by the opinion dropout had. Instead, the middle suggested two options – and in both the states there was a matter of taking loans. In the first, the states got the choice to require a loan of 97,000 crores to catch up on the revenue deficit thanks to the GST transition, but don’t include the revenue deficit thanks to the epidemic.
In this case, both the principal amount and therefore the interest will need to be paid from the longer-term compensation cess.
In the second option, states can take a loan of Rs 2.35 lakh crore for the whole compensation amount. But during this case, the burden of paying interest is going to be borne by the states, and only the essential amount is going to be paid from the cess.
Some states agree some don’t
Nearly 10 non-BJP ruled states and union territories, including Tamil Nadu, West Bengal, Kerala, Punjab, Delhi, and Chandigarh, have rejected both the choices gave by the middle, while BJP like Karnataka, Gujarat, and Uttar Pradesh The governed states have decided to settle on the primary option. Shiv Sena-NCP-Congress ruled Maharashtra has not opened its cards yet.