The GST council is a federal body in which every finance minister of every state deliberates and we should not politicize it as it amounts to an insult to the council, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Tuesday.

The GST council is a federal body in which every finance minister of every state deliberates and we should not politicize it as it amounts to an insult to the council, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Tuesday.

In response to an additional question during Question Time by NCP leader Vandana Chavan to ask why non-BJP states have higher GST fees, the finance minister said the dues will be paid according to a formula jointly worked out by the Council. and that no individual has the right to alter that wording. Sitharaman said the Council is a body that decides how this works and how the disbursements are made.

“There is a formula that has been around since the introduction of the GST. Even the way the back-to-back loan is withdrawn and distributed by the Center, but through the public account, is also something the GST council has deliberated in three council meetings,” she said.

It is good to point out that Maharashtra owes a very large amount, but other columns say Maharashtra’s share of distribution is quite higher compared to other states without any discretion, the finance minister told the House.
“I humbly propose and appeal to you that for a body like the GST Council, on which every Treasury Secretary of every state sits and answers a call, it is a collective decision of the GST Council. I appeal through you that we do not have to politicize this. No individual has the right to change the wording.

“So no distinction is made on the basis of this or that party. It is an insult to the GST Council, a federal body in which each state has its own minister of finance sitting and deliberating,” Sitharaman said. “So I would humbly urge through you that we do not politicize this division,” she said, adding that delinquencies are given to states and there is no differentiation and is done according to the formula given.

The amount given for 2021-22 is determined by the formula, and the amount paid as stated for the states mentioned by the member for these states is higher than in other states, she said, asking: “Would it member recognize that”.

Chavan had said Maharashtra provides the highest income to the country’s cat in GST but the maximum amount seeking compensation yet to be released is for Maharashtra which is a whopping Rs 11,563 crore pending.

“How come all the non-BJP states like Delhi, Andhra Pradesh, Kerala, Maharashtra, Tamil Nadu and West Bengal have numbers like this? Why is this happening?” Chavan asked.

In response to another supplementary question, Finance Minister Pankaj Chaudhary said: “Our government is taking several steps to increase GST revenue. Our government is making every effort to increase GST collection, including simplification of taxes, simplification of GST rates, e-challenges, efiling, raising awareness.”

Chaudhary said that compensation to states is for a period of five years and that the government is “committed to providing compensation to states until 2022”.

In her written response, Finance Minister Nirmala Sitharaman had said: “For the payment of compensation to states for any loss of income arising from the implementation of GST for five years, GST compensation will be levied on selected items under Section 8 of the GST (Compensation to States) Act, 2017. This is transferred to a non-maturity fund known as GST Compensation Fund which is part of the Public Account of India as defined in Section 10(1) of the Act.”

She said that all releases of compensation to states are made only from the Compensation Fund under Section 10(2) of the said Act and not from the Consolidated Fund of India and GST Compensation for fiscal years 2017-18, 2018-19, 2019- 20 and 2020-21 has already been paid to the States/UTs.

“The economic impact of the pandemic has resulted in a higher compensation claim due to lower GST collection and at the same time lower collection of GST compensation.

“The issue of the shortfall in cession collection in the Compensation Fund and GST compensation to states/UTs due to the economic impact of the pandemic has been discussed in 41st, 42nd and 43rd GST council meetings.

“Rs 1.1 lakh crore for FY 2020-21 and Rs 1.59 lakh crore for FY 2021-22 has been released to States/UTs as a back-to-back loan to cover the funds of the States/UTs due to a lack of GST compensation. This arrangement has been established after extensive consultation with Parliament and all States have opted for this arrangement.”

Sitharaman said that depending on the amount available in the Compensation Fund, Center has also released regular GST compensation to states to make up for the shortfall in GST revenue.

“Centre is committed to releasing full GST compensation to the States/UTs under the GST (Compensation to States) Act, 2017 for the transition period by extending the levy of compensation beyond 5 years to make up for the GST deficit. income and to get the loan borrowed through a special framework,” she also said.


This post Politicizing GST Council decisions as an affront to the federal body: Nirmala Sitharaman in parliament was original published at “https://www.financialexpress.com/economy/politicising-gst-council-decisions-an-insult-to-federal-body-nirmala-sitharaman-in-parliament/2461716/”

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