GST compensation: Karnataka raises Rs 2,333 crore due

Finance Minister Nirmala Sitharaman on Saturday directed officials to immediately release GST compensation of Rs 2,333 crore that is pending to Karnataka.

Nirmala issued the direction after Revenue Minister Krishna Byre Gowda, who represents Karnataka in the GST Council, raised the matter during Saturday's meeting.

"While no deadline was given, we are hopeful that the amount should come to the state in a week's time," Gowda told DH.

Gowda said GST compensation dues have should be automatically released.

"The principal accountant-general (PAG) audits our reports and sends a statement on the state's revenue. It is compared against the protected revenue. The shortfall is the compensation that the state should get. It should be automatically released without us having to ask. Our point was that the PAG has already submitted the statement on August 17. The finance minister said if the state's statement has been submitted, then the pending amount must be released immediately," Gowda explained.

In the current fiscal, Karnataka has seen a 20 per cent growth in GST revenues up to September. The state has collected Rs 11,693 crore by September this fiscal compared to Rs 9,760 crore in the same period last year.

On the GST Council's decision to exempt potable alcohol, Gowda said the state government will have to study if this can have any revenue implications.

"Extra Neutral Alcohol (ENA) is basically concentrated spirit. When it is diluted, it becomes potable liquor. In its concentrated form, it's used for various industrial purposes. From the start, Karnataka's stand was that whatever ENA that's consumable should be under state excise and not GST," Gowda said.

Gowda also said that it was based on Karnataka's request that unlabelled millet mixes were exempt from GST. Labelled millet mixes will attract 5 per cent GST instead of 12-18 per cent, he said. As agriculture minister (2013-18), Gowda aggressively promoted millets.