Tamil Nadu asks Centre to extend GST compensation till 2024

Contending that the state’s revenues are yet to recover despite the Covid-19 pandemic easing out, Tamil Nadu on Friday asked the Union Government to extend the compensation period for Goods and Services Tax (GST) till June 2024 and release pending dues of Rs 20,000 crore.

These are some of the demands that Chief Minister M K Stalin placed before Union Finance Minister Nirmala Sitharaman during a meeting in New Delhi. Release of balance basic grant and performance grant under local body grant recommended by the 14th Finance Commission is another demand that was put forth by the state government to the union government.

Tamil Nadu has been pushing the Union Government to extend the GST compensation period, which ends on June 30, 2022, as promised when GST was introduced in 2017, for another two years. Finance Minister P T R Palanivel Thiaga Rajan, who was present in the Friday meeting, had placed the demand to the Union Finance Minister in December last year and February this year.

The memorandum presented by Stalin said states accepted to forego their fiscal autonomy with an assurance from the Union Government that their revenues will be protected after the introduction of GST.

Read | Will construct model school in Chennai, says M K Stalin

“In the last five years, there has been a wide gap between the actual revenues realized and the protected revenues guaranteed. This trend was visible even before the pandemic and the gap has been increasingly wide ever since. The states’ revenues are yet to recover despite easing out of the Covid pandemic,” Stalin told Sitharaman.

At this juncture, he said, the GST compensation period is coming to an end on June 30, 2022, and consequently, in the coming financial year, Tamil Nadu will face a revenue loss of approximately Rs 20,000 crore. “We urge the Union Government to extend the period of compensation by at least two years beyond June 2022,” he added.

Stalin said the 14th Finance Commission had recommended Rs 7,899.69 crore as a basic grant for rural local bodies during its award period 2015- 2020. However, the Union Government has not released the basic grant of Rs.548.76 Crore to Tamil Nadu due to the non-conduct of local body elections in 2,900 village panchayats.

“Despite compliance with the conditions and furnishing of utilisation certificates, the grant for the year 2017-18 has not been released to Tamil Nadu. Subsequently, the grant for the years 2018-19 and 2019-20 have also not been released,” he said, noting that elections have been conducted now.

Stalin said the state has pending dues of Rs 20,860.40 crore from the Union Government, including GST compensation arrears of Rs 13,504 crore.

Watch latest videos by DH here: