A few states including Telangana have sought a five-year extension of the goods and services tax (GST) shortfall compensation, finance minister Nirmala Sitharaman told the Lok Sabha on Monday.

As per Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016, Parliament on the recommendation of the GST Council, provided for compensation to the states for loss of revenue arising on account of implementation of the goods and services tax for a period of initial five years. It ended on June 30.

GST Council, in its 42nd meeting, has recommended extending the period of levy of GST Compensation cess beyond June 2022 to cover the entire shortfall as well as servicing the back-to-back loan released to states to meet their resource gap due to the short release of compensation, Sitharaman said in a written reply to Lok Sabha.

The Centre borrowed Rs 1.1 trillion in FY21 and Rs 1.59 trillion in FY22 as back-to-back loans to meet part of the shortfall in cess collection. In addition, she said, the Centre has further released Rs 86,912 crore to states/UTs on May 31, 2022, and cleared the entire provisionally admissible GST compensation due till May, 2022.

This decision was taken to assist the states in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year. This decision has been taken despite the fact that only about Rs 25,000 crore was available in the GST Compensation Fund, she said, adding, the balance Rs 62,000 crore was released by the Centre from its own resources pending collection of cess.

As a result of the continued reforms in GST undertaken by the Centre and states, on the recommendations of the GST Council, buoyancy in GST revenue has been achieved in the recent months, she said.

The average monthly gross GST collection for the first quarter of FY23 has been Rs 1.51 trillion against the average monthly collection of Rs 1.1 trillion in the first quarter of the last financial year, showing an increase of 37%.

Source: Financial Express
https://www.financialexpress.com/economy/sitharaman-few-states-seek-extension-of-gst-compensation-for-5-yrs/2598257/

                                      For more News like this, Subscribe TAXO today