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Centre used up GST compensation fund to pay old dues

The Centre on Tuesday revealed that the GST compensation cess it had collected in the current financial year has already been partly utilised.

While stating that the GST compensation cess collected in current financial year is insufficient to release to states the admissible GST compensation for the period April to July, Minister of State for Finance Anurag Thakur said in a written reply that some of this money has been “partly utilized” for compensating states for the previous financial year.

The Centre stuck to its stand that states will have to choose one of the two options for receiving GST compensation and revealed the entire opinion of the Attorney General of India in this regard, Thakur said while replying to a spate of questions including from Elamaram Kareem (CPI-M), V. Vijayasai Reddy and Kethi Reddy Suresh Reddy (both TRS).

In written replies, Thakur maintained that the future course of action to meet the GST compensation shortfall was discussed by the GST Council on August 27 where the states were given two options to meet their GST compensation shortfall for the current financial year from market borrowing.

Thakur said five questions were put to the AG. On the question that in case the balance in the GST Compensation Fund is not adequate to meet the compensation, the AG said states are entitled to receive the full amount of compensation during the “transition period”.

But in case the balance in the Fund is insufficient, the AG said there is no express provision in the Compensation Act for the Centre to bear the liability of making good the shortfall. While the AG agreed that the GST Council can recommend extension of period for compensation, in reply to two questions he made it clear that the Centre will have the last word on any borrowing by the states.