Tamil Nadu

Deputy CM hits out at Centre over GST compensation

‘There should be no effort to limit the compensation payable to States’

Deputy Chief Minister O. Panneerselvam once again hit out at the Centre over issues like GST compensation and the settlement of dues to the State.

“In the Union Budget for 2020-21, the Finance Minister has indicated that hereafter, transfers to the GST Compensation Fund will be limited to collection by way of GST compensation cess,” he said in his Budget speech on Friday.

“The GST (Compensation to States) Act, 2017, was enacted to provide compensation to States for loss of revenue on account of implementation of the GST, based on the constitutional obligation of the Government of India to compensate the State for a period of five years under the Constitution (101st Amendment) Act, 2016,” Mr. Panneerselvam pointed out.

Obligation of Centre

Hence, it was the obligation of the Centre to find resources to pay the compensation, and there should be no effort to limit the compensation payable to States, he said and urged the Centre to discuss the issue in the GST council meetings to arrive at an ‘appropriate’ solution.

Mr. Panneerselvam welcomed the increase in the State’s share of vertical devolution of taxes from the Centre from 4.023% to 4.189%, as per the recommendation of the 15th Finance Commission. However, he said it did not make up for past injustices to Tamil Nadu, especially those brought about by the 14th Finance Commission.

The State government will take up the issue of adequate budgetary provision with the Centre to ensure it gets the ₹4,025 crore revenue deficit grant recommended by the 15th Finance Commission in 2020-2021 itself, he said.

Arrears to local bodies

Tamil Nadu is yet to receive arrears of ₹4,345.57 crore as basic grants to local bodies for 2019-20 and ₹2,029.22 crore as performance grant from 2017-18, based on the recommendations of the 14th Finance Commission, the Deputy Chief Minister said.

He pointed out that the local body grants had not been significantly increased by the 15th Finance Commission.

Tamil Nadu has been allocated ₹3,607 crore for rural local bodies and ₹1,737 crore for urban local bodies, thereby getting a total allocation of ₹5,344 crore for 2020-21, against the aggregate of ₹5,178.52 crore recommended by the 14th Finance Commission, according to details given in the Budget speech.

Reduced allocation

“The grants recommended for urban local bodies in Tamil Nadu have been reduced by 31% in 2020-21 when compared to 2019-20 because of the faulty methodology adopted by the Fifteenth Finance Commission. We will urge the Fifteenth Finance Commission to correct this anomaly in their final report,” Mr. Panneerselvam said.

“We are hopeful that the outstanding issues relating to the settlement of ₹4,073 crore in IGST dues to Tamil Nadu from the year 2017-2018 will be settled before the end of the current fiscal year,” he said.

Finance Secretary S. Krishnan pointed out that dues from the Centre stood at ₹12,263 crore, which included grants for local bodies and other Centrally-sponsored schemes.

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Printable version | Feb 22, 2020 6:16:39 PM | https://www.thehindu.com/news/national/tamil-nadu/deputy-cm-hits-out-at-centre-over-gst-compensation/article30825451.ece

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