Centre not keeping promise on GST compensation: FM - ECAS Punjab

Centre not keeping promise on GST compensation: FM

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Ruchika M Khanna

Tribune News Service

Chandigarh, August 27

Finance Minister Manpreet Badal today said he was agitated as the Centre had backed out from its commitment of giving the GST compensation to the states even though it was promised in lieu of the taxes that were subsumed as the GST was rolled out.

After attending the meeting of the GST Council, he said, “A hungry stomach knows no law and I shall hate to see the day when any state feels pressurised by its citizens to breach the spirit of the GST only because it failed to meet substantially all commitments and expectations.”

The Centre owes Punjab Rs 6,500 crore as GST compensation for the period from April to July. With the state’s own tax and non-tax revenue being severely impacted because of the Covid-induced economic crisis, the revenue receipts for the first quarter have shown a decline of 21 per cent. Punjab has not been able to clear the salary bill for July, with even frontline health workers not getting their pay.

Talking to The Tribune, Manpreet said the Centre had backed out from its commitment of giving the GST compensation to the states. “Former Union Finance Minister Arun Jaitley went on record in several GST meetings, saying if there was a shortfall in GST collections, the Centre will borrow money and compensate the states. There is no benevolence in giving the 14 per cent hike in the GST, as it was a commitment made by the Centre, after the latter calculated that they would plug the loopholes in tax collections after the GST rollout. Now, the states are being asked to borrow an additional amount. Being an Opposition-ruled state, we have no choice,” he said.

Lamenting that the Centre had seen a surge in tax collections through the cess imposed on the sale of retail fuel, Manpreet said the Centre had collected Rs 6 lakh crore as fuel prices in the past three years. “Under a VAT regime, I could have increased tax rates to keep the cash coming in, but under the GST regime, the states have no power of taxation,” he said.

The minister said he had been making fervent appeals for activating the constitutional mechanism for dispute resolution under the GST, as laid down in Section 279 (A) (ii) of the GST Act. “My opposition to the Centre should not be misunderstood, but as the Finance Minister, I am answerable to my Cabinet colleagues in Punjab, as well as the people of my state,” he said.



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