Centre urged to release ₹2,812 crore IGST dues

There is a balance of ₹1,76,688 crore left in IGST at the end of 2017-18, according to Finance Minister T. Harish Rao.

There is a balance of ₹1,76,688 crore left in IGST at the end of 2017-18, according to Finance Minister T. Harish Rao.   | Photo Credit: MohdArif

Harish Rao writes to Nirmala Sitaraman for speedy release

Given the financial crunch being faced by Telangana State, State Finance Minister T.Harish Rao has written to the Union Finance Minister Nirmala Sitaraman to release the unsettled balances of Integrated Goods and Service Tax due to the State.

The unsettled amount of ₹1,76,688 crore left in the IGST as on March 31, 2018 was transferred to the Consolidated Fund of India by the Centre instead of distributing the same to the States as IGST ad hoc settlement

While the share of Telangana in IGST works out to ₹4,464 crore , the State received only ₹1,652 crore till date, he said and urged the Union Minister to issue necessary orders and ensure that the balance amount of ₹ 2,812 crore due to the State as per the GST Act and the Constitutional provisions was released at the earliest.

Unsettled balances

In a letter addressed to Ms. Nirmala Sitaraman, Mr.Harish Rao explained in detail the shortfall of revenue suffered by the State on account of the procedure followed by the Centre in distributing the unsettled balances of the IGST based on tax devolution formula. He sought her intervention to undo the injustice done to the Telangana State.

He recalled that the C&AG in their report for the year ending 2017-18, observed that owing to the huge unsettled balances in the IGST, the GST Council at its meeting held on January 25, 2018 recommended advance settlement of ₹35,000 crore to the Centre and the States on provisional basis. The provisional allocation was based on the revenue from taxes of the States in 2015-16 subsumed under the GST and this was proposed to be adjusted in 10 equal instalments against regular settlement due in 2018-19.

However, Mr. Harish Rao said that even after the above advance settlement, there was a balance of ₹1,76,688 crore left in IGST at the end of 2017-18 but the amount was transferred to the Consolidated Fund of India. Of this, the Centre devolved ₹67,998 crore under IGST to the States/UTs adopting Finance Commission formula for devolution of Central taxes. The CAG pointed out that the procedure for devolution of IGST, however, was against the provisions of Constitution of India.

Thus out of balance of ₹1,76,688 crore, States’ share in IGST should be 50% and it worked out to ₹88,344 crore and not ₹67,998 crore as distributed to the States by the Centre, Mr. Harish Rao noted. Telangana was entitled to receive an amount of ₹3,560 crore under ad hoc settlement out of ₹88,344 crore under the share of States.

Again the Centre out of its 50% share in IGST, should devolve 42% to the States as per the 14th Finance Commission recommendations. The Centre’s share in IGST is ₹88,344 crore and out of this, amount to be devolved to States is ₹37,104crore (42%) and the share of Telangana in IGST devolution worked out to ₹904 crore. Thus the total due share of Telangana IGST is ₹4,464 crore, including ₹3,560 crore under ad hoc settlement.

Other States received compensation due to shortfall of revenue under GST Act but Telangana was one of the few States that did not receive any compensation in 2017-18 and2018-19, he said.

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Printable version | Feb 18, 2020 1:15:49 PM | https://www.thehindu.com/news/cities/Hyderabad/centre-urged-to-release-2812-cr-igst-dues/article29903084.ece

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