The sustained attack on federalism
3 years ago

The sustained attack on federalism

The Hindu  

B. Pocker Sahib, a Muslim League member from Kerala in the Constituent Assembly, was prophetic when he outlined his concerns about the possible impact of centralisation of powers. As the economic commentator Vivek Kaul said, the share of non-divisible pool cess and surcharge in total taxes collected by the Union government jumped from 12.67% in 2019-20 to 23.46% in 2020-21. On December 6, 2021, the Union government informed Parliament that its share in the total contribution of the petroleum sector to the exchequer for 2020-21 was 68%, which left only 32% to the States. The Comptroller and Auditor General found that the Union government, in 2018-19, wrongly retained ₹47,272 crore of GST compensation cess in the Consolidated Fund of India — money that was supposed to be transferred to the States. The Union government decided to increase FRBM borrowing limits, linking it to the performance of States in fulfilling certain conditions — implementation of the One Nation, One Ration policy, ease of doing business reforms, urban local body/utility reforms and power sector reforms — making it difficult for the States to perceive this as an addressal of their concerns.

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History of this topic

How raising the nation’s debt limit could reduce spending of some coronavirus relief funds
1 year, 7 months ago

How raising the nation’s debt limit could reduce spending of some coronavirus relief funds

Associated Press  

With the pandemic officially over, leftover coronavirus relief money for vaccines, public health initiatives and other programs has become a target as negotiators try to reach a budget deal to raise the nation’s debt limit. HOW MUCH IS AT STAKE The Congressional Budget Office estimates that halting the use of unobligated pandemic relief funds would result in a net spending …

Finance Ministry Confirms That Some States Have Sought Extension Of GST Compensation For A Further Period Of Five Years.
2 years, 5 months ago

Finance Ministry Confirms That Some States Have Sought Extension Of GST Compensation For A Further Period Of Five Years.

Live Law  

The Finance Ministry has confirmed that some states have sought extension of GST compensation for a further period of five years. As per section 18 of the Constitution Act, 2016, Parliament shall, on the recommendation of the GST Council, provide for compensation to the States for loss of revenue arising on account of the GST for a period of five …

DC EDIT | Making the GST regime work
2 years, 6 months ago

DC EDIT | Making the GST regime work

Deccan Chronicle  

The decision of the GST Council to extend the period for imposing a levy on certain goods to compensate the states for their loss in tax revenue on the implementation of GST regime, and the Union government’s notification amending the relevant rules last week to give effect to the decision, have come as a great relief for several states which …

Extend GST compensation to states for two more years due to COVID pandemic, Ajit Pawar tells Centre
2 years, 11 months ago

Extend GST compensation to states for two more years due to COVID pandemic, Ajit Pawar tells Centre

Firstpost  

Pawar made the comments while interacting with reporters after unfurling the National Flag in Pune on the occasion of 73rd Republic Day Pune: Maharashtra deputy chief minister and state finance minister Ajit Pawar on Wednesday urged the Union Government to extend the period of Goods and Services Tax compensation from Centre to states for two more years in light of …

Government puts off decision on tax relief for COVID-19 supplies
3 years, 7 months ago

Government puts off decision on tax relief for COVID-19 supplies

The Hindu  

The Goods and Services Tax Council failed to agree on immediate tax breaks for critical pandemic relief supplies, including COVID-19 vaccines, and constituted a Group of Ministers to recommend individual items’ tax rates by June 8. Union Finance Minister Nirmala Sitharaman, chairing the Council’s first meeting in nearly eight months on Friday, said there were protracted discussions with ‘varying viewpoints’ …

States may seek 5-year extension GST compensation in upcoming meet: Report
3 years, 7 months ago

States may seek 5-year extension GST compensation in upcoming meet: Report

India Today  

State authorities are likely to ask for an extension of five years for compensation cess at the upcoming Goods and Services Tax Council meeting on Friday. The GST Council meeting, which will be chaired by Finance Minister Nirmala Sitharaman, is also likely to take up the reduction in late fees for late filing of GSTR 3B returns since July 2017, …

GST Council meet today to discuss compensation issue
4 years, 2 months ago

GST Council meet today to discuss compensation issue

India TV News  

As the GST compensation cess issue still remains unresolved with around 10 opposition-ruled states and Union Territories not agreeing with the Centre's borrowing proposals, the GST Council, consisting of all state Finance Ministers and headed by the Union Finance Minister, will meet today to discuss and try to reach to a consensus on the matter. This gap, however, needs to …

GST Compensation Quandary: States Ruled by BJP Rivals Need to Soften Stand and See Reason
4 years, 3 months ago

GST Compensation Quandary: States Ruled by BJP Rivals Need to Soften Stand and See Reason

News 18  

The inconclusive GST Council meeting, with repeated sparks between the Centre and Opposition-ruled states over the payment of compensation, sets a rather sad precedent. Decision was postponed to the next meeting on 12th of October.— Thomas Isaac October 5, 2020 Kerala’s finance minister Thomas Isaac tweeted after the council’s meeting that “10 states demand that full compensation should be paid …

GST compensation due to States is ₹1.51 lakh cr.
4 years, 3 months ago

GST compensation due to States is ₹1.51 lakh cr.

The Hindu  

The GST collection during April-August declined on account of the COVID-19 induced lockdown, and the compensation due to States stands at over ₹1.51 lakh crore, Minister of State for Finance Anurag Singh Thakur said on Monday. The provisional GST compensation due to States and Union Territories for 2020-21 was highest for Maharashtra at ₹22,485 crore, followed by Karnataka, Uttar Pradesh, …

Centre clears the air on GST dues
4 years, 4 months ago

Centre clears the air on GST dues

Live Mint  

The Union government will honour its commitment to compensate states for the shortfall in collections of goods and services tax despite the strain on its finances because of the pandemic, a senior government official said. The official said the Centre convened a meeting of the finance secretaries of states last week to clarify its position. At the last meeting of …

Borrow from RBI to bridge GST gap, Centre tells States
4 years, 4 months ago

Borrow from RBI to bridge GST gap, Centre tells States

The Hindu  

The Centre on Thursday acknowledged that States are likely to face a GST revenue gap of ₹3 lakh crore this year, as the economy may contract due to COVID-19, which Finance Minister Nirmala Sitharaman termed an unforeseen “act of God”. “You are facing an act of God, which might even result in a contraction of the economy — to what …

GST shortfall this year at Rs 2.35 lakh cr, most of it due to pandemic: Govt
4 years, 4 months ago

GST shortfall this year at Rs 2.35 lakh cr, most of it due to pandemic: Govt

India Today  

Finance Minister Nirmala Sitharaman told states during the GST council meet on Thursday that GST shortfall is only for the current fiscal. Ajay Bhushan Pandey, Revenue Secretary said GST shortfall in FY21 at Rs 2.35 lakh crore of which only 97,000 crore due to implementation of GST while the rest is due to the Covid-19 pandemic. Union Finance Minister Nirmala …

Covid-19 presents a tax crisis ahead of GST Council meet
4 years, 4 months ago

Covid-19 presents a tax crisis ahead of GST Council meet

India Today  

The Covid-19 pandemic has worsened the economic slowdown in India. To be held via videoconference, the GST Council meet is expected to discuss the compensation payout to states and the legality of borrowing from the market to meet a revenue shortfall. The SBI paper's estimate for the entire financial year is a revenue shortfall of around Rs 3 lakh crore …

Time to overhaul or replace GST
4 years, 5 months ago

Time to overhaul or replace GST

The Hindu  

K erala’s Finance Minister Thomas Isaac has declared it a “betrayal” of trust. As a result, even after dipping into the surplus available in the compensation fund, accumulated when cess collections exceeded the revenue shortfall during the first two years of the GST’s existence, the Centre did not have adequate resources to meet the shortfall of the States in 2019-20. …

State’s GST collections down by 24% in July
4 years, 5 months ago

State’s GST collections down by 24% in July

The Hindu  

Tamil Nadu’s Goods and Services Tax collections declined 24% to ₹4,635 crore in July this year, compared to ₹6,084 crore in July 2019, according to data released by the Union Finance Ministry on Saturday. As the State’s GST collections continue to fall with the lockdown affecting economic activity and consumption, a senior government official said businesses continued to struggle because …

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