Kerala

Financial crisis set to worsen

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Uncertainty over Centre’s share of GST compensation

The uncertainty over the Centre sharing the Goods and Services Tax (GST) compensation of ₹3,200 crore with the State is set to worsen the resource crunch in the weeks ahead.

The dip in GST collection has been flagged as a reason for deferring the compensation share when Kerala, along with six other non-BJP ruled States, are mounting pressure on the Centre to immediately convene the GST Council and explore the possibility of moving the Supreme Court to secure the dues.

Skewed implementation of the GST has taken a heavy toll on tax collection and the State is scraping the bottom of the barrel to meet its committed expenditure including salary, pension and other administrative expenses.

Against the 30% target set by the government, tax collection remains at 14%. A high-level meeting of tax sleuths convened at the behest of Finance Minister T.M. Thomas Isaac the other day had worked out a course of action for shoring up the collection from January, but the Centre’s refusal to share the compensation has come as a real jolt.

The government would have to source funds within the next fortnight for paying the salary and service pension as well as the welfare pensions for various sections during the Christmas season.

Though the government has clarified that the crisis would not impact the treasury outgo for the Plan projects of local self-government institutions, the payments due for civil works and other schemes may be seriously affected.

Tax Department sources told The Hindu that the Central decision to extend the deadline for filing annual returns from time to time was one of the prime reasons for the crisis. The returns for 2017-18 will be filed only this month and 2018-19 by March. And this makes scrutiny a challenging task.

The meeting had decided to increase its reliance on data analytics for enhancing the efficacy of the resource mopping drive and strengthen risk profiling, for detecting suppression of details by traders and evasion to enhance the collection.

The reluctance of the Centre to apportion the compensation may sap the gains of all such plans and would only worsen the crisis, sources said.

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Printable version | Dec 12, 2019 11:21:52 AM | https://www.thehindu.com/news/national/kerala/financial-crisis-set-to-worsen/article30167544.ece

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