New Delhi: Several states have complained that their capital expenditure plan and developmental activities are getting affected due to delayed payment of GST Compensation to them.
Under the GST (Compensation to States) Act of 2017, the Union government is required to settle GST Compensation dues to states every two months. However, as per the latest official information given in the Parliament, payment of GST compensation fund to states has been delayed beyond the statutory limit on several occasions.
“Capital expenditure plan and other developmental activities of the state of Andhra Pradesh have been affected due to delayed payment of GST Compensation Fund by the Centre,” said Lavu Shri Krishna, Lok Sabha member from Nasaraopet constituency in the state.
According to the information in the Lok Sabha, the Union government has only released GST compensation funds to Andhra Pradesh for the first six months of this fiscal and partly paid for the month of October and November.
In case of October-November, the Union only paid Rs 387 crore against the total dues of Rs 682 crore. And an amount of Rs 295 crore, more than 40% of the total amount due for the period of October-November, remained unpaid till early this month.
It prompted thirty-six years old YSR Congress member Lavu Shri Krishna Devarayalu, who represents Narasaraopet Lok Sabha Constituency in Andhra Pradesh, to seek detailed data about GST collected and paid back to the state since its implementation in July 2017.
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Lavu Shri Krishna told ETV Bharat that delayed payment of GST compensation has hurt the state’s capital expenditure plan.
“If we (the Centre) are not paying IGST share from the month of September and October of 2019 and now we are in the month of March. If the Centre is not paying on time for three-four or five months then how can a state like Andhra Pradesh plan its budget, plan its development activities and its capital expenditure?” he asked.
Similarly, KK Ragesh, Rajya Sabha member from the state of Kerala, complains that by delaying the payment of GST Compensation dues to states, the Union government is violating its statutory obligations.
“As per the GST Compensation Act, the central government is required to pay GST compensation to states bimonthly. But the Union government is not discharging its statutory responsibility by paying GST compensation on time,” said CPM member in the Rajya Sabha.
As per the GST Compensation Act of 2017, the Centre is required to fully compensate the states for a period of five years if they incur any revenue loss following the implementation of GST.
The law requires the Centre to take into account 14% annual compound growth in a state’s revenue collection to calculate the amount of compensation and clear the dues on bi-monthly basis. However, states like Andhra Pradesh and Kerala have faced delayed payments of GST Compensation dues, prompting the MPs from these states to raise questions in Parliament.
KK Ragesh says GST Compensation Dues are a crucial source of a state’s revenue collection and any delays in their settlement forced Kerala finance minister Thomas Issac to held several rounds of meetings with finance minister Nirmala Sitharaman.
“Kerala’s GST Compensation was paid only after tremendous pressure was built on the central government as we have also raised the question in Parliament and our finance minister met with the Union finance minister several times,” KK Ragesh told ETV Bharat.
“Every time four months compensation payment remains due. December compensation has not yet been paid and now we are in March so four months compensation has not been paid to the state,” said KK Ragesh, adding that the stand taken by the Central government has pushed several states in to deep crisis.
Upset with the state of affairs, the young MP from Nasaraopet in Andhra Pradesh also says that he will raise supplementary question in the Lok Sabha to press for early release of GST Compensation funds to the state.
“Definitely, I will be raising supplementary questions with regard to the non-payment of IGST on time for a state like Andhra Pradesh because Andhra Pradesh has a deficit budget for so many years,” Lavu Shri Krishna told ETV Bharat.
(Article by Senior Journalist Krishnanand Tripathi)
