New Delhi: The GST Council is a federal body in which every finance minister from every state deliberates and we should not politicise it as it amounts to an insult to the Council, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Tuesday.
Replying to a supplementary during the Question Hour by NCP leader Vandana Chavan for asking why non-BJP states have higher GST compensation dues, the finance minister said the dues are paid as per a formula jointly worked out by the Council and no individual has the right to tweak that formulation.
Sitharaman said the Council is a body which decides on how this works out and disbursements happen.
“There is a formula which has been in place since the time the GST has been implemented. Even the way in which the back-to-back loan is being taken and distributed by the Centre but through the public account, is also something which the GST Council has deliberated in three council meetings,” she said.
It is well to point out that Maharashtra has a very big amount due, but other columns say that the share of Maharashtra in distribution without any discretion has been fairly higher as compared to other states, the finance minister told the House.
“I humbly submit and appeal through you that for a body like GST Council in which every Finance Minister from every state sits in and takes a call, it’s a collective decision of the GST Council. I appeal through you that we don’t need to politicise this. No individual has the right to tweak the formulation.
“Therefore, there is no differentiation made on the basis of this party or that party. It’s an insult to the GST Council, which is a federal body in which every state has its own finance minister sitting and deliberating,” Sitharaman said.
“So, I would humbly appeal through you that we do not politicise this distribution,” she said, adding that arrears are given to states and there is no differentiation and is done as per formula given.
The amount given for 2021-22 is determined as per the formula and the amount paid as mentioned for the states mentioned by the member for these states is higher than other states, she said, asking, “Would the member recognise that”.
Chavan had said that Maharashtra is providing the highest revenue to the kitty of the country in GST, but the maximum figure which seeks compensation yet to be released is for Maharashtra, which is a whopping Rs 11,563 crore pending.
“Why is it that all non-BJP states like Delhi, Andhra Pradesh, Kerala, Maharashtra, Tamil Nadu and West Bengal have this kind of figures? Why is this happening?” Chavan asked.
In reply to another supplementary, Minister of State for Finance Pankaj Chaudhary said, “Our government is taking several steps to increase GST revenue. Our government is making all efforts to increase GST collection which includes simplification of tax, simplify GST rates, e-challans, efiling, creating awareness.”
Chaudhary said compensation to states is for a period of five years and the government is “committed to providing compensation ti states till 2022”.
In her written response, Finance Minister Nirmala Sitharaman had said, “For the purpose of payment of compensation to States for any loss of revenue arising on account of implementation of GST for five years, a GST Compensation Cess is levied on select items under Section 8 of the GST (Compensation to States) Act, 2017. This is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the act.”
She said all releases of compensation to States are done only out of Compensation Fund as per Section 10(2) of the said Act and not from the Consolidated Fund of India and GST compensation for financial years 2017-18, 2018-19, 2019-20 and 2020-21 has already been paid to the States/UTs.
“The economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess.
“The issue of shortfall of cess collection into Compensation Fund and GST compensation to States/UTs due to economic impact of the pandemic has been deliberated in 41st, 42nd & 43rd GST council meetings.
“Rs 1.1 lakh crore for FY 2020-21 and Rs 1.59 lakh crore for FY 2021-22 has been released to States/ UTs as back to back loan to meet the resource of the States/UTs due to shortfall in GST compensation. This arrangement has been finalized after detailed deliberations with the States and all States have opted for this arrangement.”
Sitharaman said depending on the amount available in the Compensation Fund, Centre has also been releasing the regular GST compensation to States to make up for GST revenue shortfall.
“Centre is committed to release full GST Compensation to the States/UTs as per GST (Compensation to States) Act, 2017 for the transition period by extending the levy of Compensation cess beyond 5 years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme,” she also said.
