<div><p>The GST Council meeting on Thursday, called to discuss ways to enhance states’ compensation, is likely to be a stormy as federal bodies will demand the Centre compensate them for the losses incurred in implementing the new indirect tax regime and the Centre may not agree.</p><p>The council will also discuss an overall review of the GST regime itself, where states have adequate representation.</p><p>The non-BJP-ruled states like Kerala, Punjab and Chattisgarh are demanding that there should be a vice-chairman post in the council. The post has remained vacant since the GST was rolled out in 2017.</p><p>Another contentious issue is likely to be the demand from the states for extension of GST compensation cess collection to 10 years from present five years.</p><p>Compensation cess is paid to the states in lieu of giving up their powers to collect local taxes on goods and services, which was subsumed under the GST in 2017. The compensation is the difference between actual revenue collected by the states and the projected revenue. The projected revenue is the revenue growth of 14% per year for the states, where the base year is 2015-16.</p><p>The Centre has not paid compensation to states since April this year. The compensation amount for March was paid in July. The Centre is reluctant to pay the GST compensation to states due to the revenue losses it has incurred during Covid period. It, therefore, sought Attorney General K K Venugopal’s suggestion on the matter, who has replied by saying the Centre is bound to pay fully to the states irrespective of any shortfall in the revenues.</p><p>New Delhi contends the total amount of compensation released for the year 2019-20 is Rs 1,65,302 crore whereas the cess collected for the same period was Rs 95,444 crore. The compensation amount per month for the states is pegged at over Rs 20,000 per month for 2020-21.</p><p>Most of the states, including Delhi, have said that the shortfall in their GST collection is to the tune of up to 90% and sought that the Centre borrows from the market to compensate them.</p><p>Congress President Sonia Gandhi on Wednesday supported chief ministers of seven opposition ruled states on issues including GST compensation and said the refusal to compensate states for GST payments that are due was nothing short of a betrayal.</p></div>
<div><p>The GST Council meeting on Thursday, called to discuss ways to enhance states’ compensation, is likely to be a stormy as federal bodies will demand the Centre compensate them for the losses incurred in implementing the new indirect tax regime and the Centre may not agree.</p><p>The council will also discuss an overall review of the GST regime itself, where states have adequate representation.</p><p>The non-BJP-ruled states like Kerala, Punjab and Chattisgarh are demanding that there should be a vice-chairman post in the council. The post has remained vacant since the GST was rolled out in 2017.</p><p>Another contentious issue is likely to be the demand from the states for extension of GST compensation cess collection to 10 years from present five years.</p><p>Compensation cess is paid to the states in lieu of giving up their powers to collect local taxes on goods and services, which was subsumed under the GST in 2017. The compensation is the difference between actual revenue collected by the states and the projected revenue. The projected revenue is the revenue growth of 14% per year for the states, where the base year is 2015-16.</p><p>The Centre has not paid compensation to states since April this year. The compensation amount for March was paid in July. The Centre is reluctant to pay the GST compensation to states due to the revenue losses it has incurred during Covid period. It, therefore, sought Attorney General K K Venugopal’s suggestion on the matter, who has replied by saying the Centre is bound to pay fully to the states irrespective of any shortfall in the revenues.</p><p>New Delhi contends the total amount of compensation released for the year 2019-20 is Rs 1,65,302 crore whereas the cess collected for the same period was Rs 95,444 crore. The compensation amount per month for the states is pegged at over Rs 20,000 per month for 2020-21.</p><p>Most of the states, including Delhi, have said that the shortfall in their GST collection is to the tune of up to 90% and sought that the Centre borrows from the market to compensate them.</p><p>Congress President Sonia Gandhi on Wednesday supported chief ministers of seven opposition ruled states on issues including GST compensation and said the refusal to compensate states for GST payments that are due was nothing short of a betrayal.</p></div>
