Huge loss to states as Centre miscalculated IGST, says CAG report

NEW DELHI: Even as the Centre and states are locked in a tussle over non-payment of GST compensation, the Comptroller and Auditor General of India has found the Central government wrongly calculated the integrated goods and services tax (IGST), resulting in states getting much lower share from their GST pool.

“During 2018-19, a sum of Rs 15,001 crore was erroneously transferred and accounted as states’ share of net proceeds of IGST instead of being apportioned between Centre and States,” said the CAG report, which was tabled in Parliament on the last day of the monsoon session. 

Under GST rules, the Rs 15,001 crore should have been split between the Centre and states. Last year, the CAG had observed that devolution of IGST was not consistent with the scheme of GST.

“In addition, a balance of Rs 13,944 crore was left un-apportioned under the head and retained in CFI (Consolidated Fund of India), even though the amended IGST Act now provides for ad-hoc apportionment of IGST. As a result, states received less funds on account of IGST,” the CAG report said. 

During audit, “No reasons were provided by the Department of Revenue for non-apportionment of this balance amount,” the report said.

The report said this helped the Centre window-dress its financials at states’ expense. “This implies GoI’s tax receipts were overstated to that extent and the revenue deficit understated during the year. It is thus recommended the devolution/apportionment of IGST be reviewed and aligned with the extant Constitutional and Statutory Provisions,” it added. 

States haven’t received GST compensation for the past five months. The matter is likely to be raised in the next GST Council meeting on October 4.