States want urgent GST Council meet for addressing ₹40,000 cr due

Amit Mitra, Bengal Finance Minister has claimed for the GST compensation and the argument over GST compensation continued between the Centre and the State governments. Amit Mitra points out that the dues owed to the States and three Union Territories with Legislative Assemblies total about ₹40,000 crore.

The GST Act provides that States and UTs with Assemblies are guaranteed compensation if the GST revenue growth is less than 14 per cent. The amount is paid bi-monthly. This year, States and three UTs were paid ₹28,000 crore for the June-July period. They are yet to be paid for August-September, which was due in October.

The Centre has assured the States/UTs that the dues will be paid soon. If the compensation amount of ₹28,000 crore is taken as the base, then the total amount required for the remaining period would be ₹84,000 crore. The cess amount expected to be collected in the remaining period based on the mop-up in April-August is ₹58,200 crore. Taking into account the unutilised cess amount of ₹23,400 crore, the total amount available would be ₹81,600 crore.

The condition is worrying as any further shortfall in the revenue will further increase the gap between the amount available for release of compensation and the amount of compensation required to be released.

Five opposition ruled States - Delhi, Rajasthan, Kerala and Punjab apart from West Bengal - in a statement expressed concern over the delay in payment of compensation. Though the compensation is guaranteed by law, there is no legal clarity on what happens when the Centre does not pay or is unable to do so.