States may put Centre on mat on GST

Move cut-off date for ending compensation from 2021-22 to 2026-2027: Baghel

Published - December 09, 2019 12:17 am IST - NEW DELHI

Bhupesh Baghel

Bhupesh Baghel

Ahead of the crucial Goods and Services Tax (GST) Council meeting on December 18, where States are likely to put the Centre on the mat on not being paid their dues, Chhattisgarh Chief Minister Bhupesh Baghel has written to Prime Minister Narendra Modi asking that the cut-off date for ending compensation to the States be moved from 2021-22 to 2026-2027.

Sources in Raipur said Mr. Baghel had said the same at a recent meeting with the NITI Aayog in New Delhi and added that Chhattisgarh, as a producer State, was suffering owing to the delay and inadequate compensation. “The government is saying that since rates kept changing, the GST collection has not been what was projected. In that situation, the Centre needs to re-look at at least the cut-off date for ending compensation, extending it from 2021-22 to 2026-27,” said a source.

States apprehensive

Many States expressed apprehensions about not getting their compensation on time or at all, with some alleging that they had to incur debts to meet the expenses predicated on GST compensation monies. “The Centre needs to respond to us, otherwise we will have no option but to pass resolutions in our Assemblies demanding that compensation be extended,” said a senior official in Raipur.

Earlier in the week, the Centre had written to all the States voicing concerns that due to the lower GST collections, the compensation cess might not be enough to pay for losses arising out of the tax system.

Shortfall in collection

The government had budgeted for ₹6,66,343 crore in GST collections for the financial year 2019-20, of which only about 50% has been collected so far, with just three months to go for the financial year to end. The Centre had targeted ₹1,09,343 crore compensation cess collections, of which it has so far collected ₹64,528 crore. The December 18 meeting is set to be an explosive affair.

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