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Government releases Rs 35,298 crores GST compensation to states

Under fire over delay in GST compensation, the government today released Rs 35,298 crore to states.

ET Online|
Updated: Dec 16, 2019, 07.33 PM IST
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GST
The GST Council meeting will take place on Dec 18.
Facing heat over delay in compensation, the government today released Rs 35,298 crore to states.

The matter was likely to be taken up in the upcoming GST Council meeting where states, especially the Opposition-ruled ones, expected to try and pin the Centre down over the delay in the release of compensation.

Speaking at the India Economic Conclave event of the Times Network, finance minister Nirmala Sitharaman, today, acknowledged the delay in payment of compensation on account of shortfall in GST collection.


She said that the government at the Centre and the states are working to augment the GST revenue. She said that the shortfall is due to extension granted in filing of returns to flood-hit states and slowdown in consumption faced by certain sectors.

On the issue of rates rejig, the finance minister said that the buzz of a rate restructuring is everywhere except at her office. She said that the growth in GST collection this year have been below expectations.

The GST Council will meet on December 18 where it will take up the matter of falling GST revenue.

Nirmala Sitharaman in the Rajya Sabha on December 12 stated that in 2017-18, the total cess collected was Rs 62,596 crore, of which Rs 41,146 crore was released to states. The remaining Rs 15,000 crore was accumulated in the Cess Fund. In the next year, Rs 95,081 crore was collected and Rs 69,275 crore released to states but "cess accumulated in the Fund was zero," she had said, according to a verbatim transcript of her speech available on the Rajya Sabha website.

It wasn't clear how no money was accumulated in the Cess Fund in 2018-19 when, according to her, only Rs 69,275 crore out of Rs 95,081 crore was paid.

According to Sitharaman, during the current fiscal year that began in April 2019, cess collections till October 31 were Rs 55,467 crore but compensation released to the states was Rs 65,250 crore. "The Government of India has released Rs 9,783 crore more than the amount raised through cess collections (this fiscal)," she had said in the Rajya Sabha.

The delays to pass on the money are due to slippage in collections and the states have nothing to be embarrassed about, she said. "It is certainly their right, I am not denying. At the same time, I am also making it clear to say that I am not reneging on that. States will be given. We are certainly not reneging on it. I admit that the payments which had to go the compensation head have not been given for two months slot."
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