Government rejects options on GST compensation - ECAS Punjab

Government rejects options on GST compensation

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Tribune News Service

Chandigarh, August 31

Punjab has formally rejected both options given by the Centre to make up for the shortfall of Goods and Services Tax (GST) compensation. Punjab Finance Minister Manpreet Singh Badal has written to Union Finance Minister Nirmala Sitharaman, informing her of the state's decision, while seeking clarification on certain issues.

The options to raise resources by borrowing were given by the Union Finance Minister during a meeting of the GST Council on Thursday. Punjab, which still has GST compensation dues worth Rs 6,500 crore pending with the Centre (for April- July), had clearly said then, too, that the options were not viable and expressed its displeasure at the Centre backing out from giving the GST compensation.

Breach of assurance

We take both options with great regret as a clear breach of solemn and constitutional assurance by the Central government. —Manpreet Badal, Finance Minister

"We take both options with great regret as a clear breach of solemn and constitutional assurance by the Central government," Manpreet said in his letter sent to the Union Minister today. "This is a betrayal of the spirit of cooperative federalism that formed the backbone of the GST journey so far," he said, reiterating his demand for a dispute resolution mechanism.

He also demanded that a group of ministers (GoM) be set up to deliberate the issue, which should give its recommendations within 10 days. He said the states had almost no role in the finalising the tax rates under the GST and future borrowings and repayments would also change, based on the decisions taken by the GST Council, where the Centre plays a decisive role.

In his letter, Manpreet also sought clarification on the compensation calculation in the period after January 2021. He also questioned the basis on which the government calculated the loss due to GST implementation.



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