Ahead of crucial meeting, Centre releases Rs 35,000 crore GST payment to states

Ahead of the crucial Goods and Services Tax (GST) Council meeting, the Centre on Monday (December 16) released pending compensation of about Rs 35,000 crore to states and Union Territories. It is to be noted that the GST Council is the apex body of the tax regime and it is scheduled to meet on December 18 (Wednesday 18).

“The central government has released GST compensation of Rs 35,298 crore to States and Union Territories today,” Central Board of Indirect Taxes and Customs (CBIC) said in a tweet.

Notably, several states had recently asked the Centre to release their pending GST payments as the delay in payment was affecting infrastructure projects in their states. Some MPs had raised this issue in Parliament last week and Union Finance Minister Nirmala Sitharaman had assured that Centre was committed to releasing the pending funds.

On Monday too, Sitharaman stressed that the Centre was aware of its commitment and it would keep its promise of GST compensations. The Union Finance Minister also said that the states must not worry over the delay in GST payment because it is not their fault. Sitharaman also admitted that GST collections have failed to meet the expectations of the Central government. The finance minister said that the below-par GST collections could be because of a decrease in GST filing due to natural calamities and slowdown in consumption.

In November, 2019, the finance ministers of Kerala, West Bengal, Delhi, Rajasthan and Punjab had released a joint statement, saying the delayed payment from the Centre was putting “acute pressure” on their fiscal situation.

On December 8, Telangana Chief Minister K Chandrashekar Rao had urged Sitharaman to release Rs 4,531 crore in GST dues pending from the central government. In a letter to the Union Finance Minister, Rao had explained the financial position of the state and the tax devolution received by Telangana from Centre so far.

"Tax devolution in Telangana is Rs 19,719 crore, 6.2 per cent more than last year. But this state has received only Rs 10,304 crore till November, which is less by Rs 224 crore compared to last year. So, instead of receiving an enhanced amount, the state has received less," the Chief Minister said.