Economy

Finance Ministry to engage with States to shore up GST revenue

Taxing times: There is no set pattern in the amount of compensation paid to each State.

Taxing times: There is no set pattern in the amount of compensation paid to each State.   | Photo Credit: Getty Images/iStockphoto

Almost fourfold rise in tax compensation to States for June-July prompts move

Alarmed by a nearly fourfold rise in GST compensation to States for June-July, the Finance Ministry is crafting a strategy to shore up tax revenues and engaging with States to identify issues hindering their collections.

Finance Secretary Hasmukh Adhia has started meeting GST officers, both from Central and State tax departments, in the State capitals to understand issues plaguing GST collections.

There has been a spike in the bi-monthly GST compensation paid to the States by the Centre.

The Centre paid ₹14,930 crore to compensate States for revenue loss incurred in June and July, a nearly four-fold jump compared to the ₹3,899 crore paid for the months of April and May.

“A strategy is to be devised to shore up GST revenues. The amount of compensation to be paid to each State varies every month and there is no set pattern,” an official told PTI. The reason for increased compensation also varied from State to State. For instance, in one of the cases, a State saw a huge outgo on account of VAT refund following a court verdict, the official added.

Talks with four States

A discussion to shore up revenues has already happened with four States — Punjab, Himachal Pradesh, Puducherry and Jammu and Kashmir, while a dialogue with Bihar and Uttarakhand is slated to take place later this month.

The official said that one of the options being considered is stepping up anti-evasion measures with a focus on top 30 taxpayers.

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Printable version | Apr 7, 2020 10:21:48 AM | https://www.thehindu.com/business/Economy/finance-ministry-to-engage-with-states-to-shore-up-gst-revenue/article24910071.ece

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