States demand immediate disbursal of IGST dues

States on Wednesday pressed for immediate resolution of pending Integrated Goods & Services Tax (IGST) issue beside more funds for specific schemes.

These issues figured during discussion between Centre and States as a part of pre-budget consultation chaired by Finance Minister Nirmala Sitharaman. The meeting was attended by Chief Ministers of Goa, Haryana and Puducherry, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17 Finance Ministers/Ministers representing their states and senior Officers from Union Government and States.

Sitharaman elucidated Union Government's philosophy of "Cooperative Federalism" and steps taken by the Union Government to bolster growth of the economy. State Governments welcomed the opportunity to present their views and gave their suggestions on growth, investment, resource requirement and fiscal policy. They also suggested measures to strengthen cooperation between States and Centre to attain $5 trillion economy. The Finance Minister welcomed the suggestions made by the State/UTs in the meeting. She assured that the memorandums submitted by State/UTs will be examined and suitably considered.

In its memorandum, Tamil Nadu’s Deputy Chief Minister, who also holds finance portfolio, raised the issue of IGST arrears. He said that the Centre is yet to provide the IGST arrears of 2017-18 amounting to ₹4,073 crore to the state. The initiative of the GST council to form a Group of Ministers to look into the issue is a welcome move. “I strongly urge the Union Government to address this pressing concern of the States at the earliest,” he said.

According to him, during the 37th meeting of GST council, it was indicated by the Centre that the obligation to pay the compensation is subject to the availability in the GST Compensation Fund. “I would like to state emphatically that the obligation to provide GST compensation is not restricted to the amount of available compensation cess,” he said while reiterating the fact that the Centre is constitutionally obliged to make good the States for any shortfall in GST collections.

He alleged that the Centre had resorted to incorrect accounting for IGST in 2017-18. An amount of ₹88,344.22 crore of unallocated IGST was routed through the Consolidated Fund of India. “If 50% would have been distributed to the States directly, the States would not have been deprived of their rightful share of IGST and today the compensation fund would not face a shortfall of ₹48,650 crore,” he said.

Participating in the deliberation, Deputy Chief Minister and Finance Minister of Delhi, Manish Sisodia said that this Union Territory with Assembly is getting only grants in lieu of share in central taxes and that too has been kept stagnant at ₹325 crore since 2001-02 while all other States get an enhanced share in central taxes every year. Accordingly, he sought provision of ₹7,150 crore for the current fiscal and ₹8,150 crore for 2020-21.

He also demanded more financial assistance to Delhi along with Punjab, Haryana and Uttar Pradesh under a Central Sector scheme, ‘Promotion of Agricultural Mechanisation for In-Situ Management of Crop Residue…’ so that issue of air pollution in national capital could be tackled effectively.

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