Centre and states dispute overextension of GST compensation

Ground Report | New Delhi: Centre and states dispute overextension; Finance Minister Nirmala Sitharaman has expressed her inability to increase the compensation of GST after the period of June 2022, Business Standard, reported. The state governments have expressed surprise at the response of the Finance Minister. He says that during the meeting of the GST Council held on Friday, it was decided that this issue will be discussed further.

West Bengal Urban Development Minister Chandrima Bhattacharya, who attended the GST Council meeting, said that the council has not taken any decision on increasing the GST compensation beyond the period of June 2022. "This decision was not taken. All issues, including the extension of GST compensation to states after June 2022, have been referred to the Group of Ministers," he said.

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Centre and states dispute overextension of GST

He said that the central government is taking advantage of the provision of the 101st Constitutional Amendment. It provides that compensation will be given for five years from the date of implementation of GST. The GST regime was implemented in the country on 1 July 2017 and will end on 30 June 2022. Yes, the council can extend it if it wants.

“The extension, till March 2026, is something that the Center was supposed to give anyway, but didn't. It is paying dues. But, what about the next part? It will not be possible for the states to run like this,” said the West Bengal minister. He said that the states strongly advocated for an extension of five years.

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Sisodia advocated for extension

Delhi Finance Minister Manish Sisodia also reiterated that the issue of compensation to states has been referred to the GoM, which will submit its report in two months. Sisodia advocated for an extension of five years. Delhi has estimated an annual loss of around Rs 8,000 crore if compensation is not paid after June 2022.

Similarly, Kerala also pressurized the states to give compensation for another five years. On the other hand, Punjab Finance Minister Manpreet Singh Badal demanded an extension of the compensation period to the states by three years.

Tamil Nadu Finance Minister P Thyaga Rajan said compensation was not extended to states beyond 2022 during the council meeting. While Rajan did not attend the meeting, he was informed about the result by the official representing the state.

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