Punjab Finance Minister Manpreet Badal, along with his counterparts of West Bengal, Kerala, Delhi, and Rajasthan, on Wednesday appealed to the Union Finance Minister Nirmala Sitharaman to release the “outstanding” GST (Goods and Service Tax) compensation of these States without any delay.
The demand was made during the meeting of the Empowered Committee of State Finanace Ministers at New Delhi.
Later in a Joint statement, the Finance Ministers said that GST compensation for the month of August and September, required to be paid by the Central Government, sometimes in October, continues to be outstanding till date.
“No explanation what so ever has been furnished for this delay of nearly one month. As a result, states are facing acute pressure on fiscals, some already resorting to ways and means or even overdrafts,” they said.
They said that GST comprises nearly 60 per cent of the tax revenues of the States. “Many States are already facing deficits up to 50 per cent of the total GST. Such huge deficits have potential to disrupt the budget and planning processes in a host of areas literally bringing activities of the states to a grinding halt,” they said.
It was recalled that the assurance of GST compensation was necessary enabler in states agreeing to subsume their fiscal sovereignty into GST. This was preceded by long deliberations within the Empowered Committee where many states have apprehensions about being able to attain uninterrupted compensation. It was only after the required provisions for compensation were incorporated in the constitution that States agreed to join the GST.
“The current delay has shaken the confidence of the states who have, so far, supported the GST in spirit of rare bonhomie. Despite many challenges from time-to-time, States have extended their support to all the major decisions of the GST Council,” they added.
State FMs appealed to the Union FM to look into the matter personally and release the compensation without any further delay.
FMs also suggested that the matter should be placed on the agenda of the next meeting of the GST Council and a healthy mechanism be evolved to provide compensation in future with due urgency and judiciousness.