The Telangana government once again made its stand clear at the Goods and Services Tax Council meeting on Monday that the Centre pay the entire GST compensation due to States on account of dismal collections this year from its own coffer.
The State government rejected both the options given by Centre to make up for unpaid GST compensation.
Option one offered States to borrow the shortfall arising out of GST implementation, estimated at ₹ 97,000 crore, to be borrowed through the issue of debt under a special window. Option two offered the States to borrow the entire compensation shortfall of ₹ 2.35 lakh crore through the issue of market debt.
Speaking at the virtual meeting, presided over by Union Finance Minister Nirmala Sitaraman, Telangana Finance Minister T. Harish Rao asked the Centre to borrow the money and pay compensation to States which is their right under the GST Act.
Unpaid instalments
Mr. Rao demanded that the government immediately release to the States ₹ 30,000 crore deposited in the account of GST Council as GST compensation cess. Three instalments of money were already unpaid to States in last six months. This money was valuable to States in the current COVID situation.
Mr. Rao asked Centre not to link the lifting of cap on borrowings by States as part of Atmanirbhar package with payment of GST compensation. The entire quantum of money due to State under Integrated GST should be paid immediately.
A sum of ₹ 24,000 crore towards IGST for 2017-18 was deposited with the Consolidated Fund of India. Telangana’s share in it was ₹ 2,638 crore which should be released immediately.
Input tax credit
A release said Ms. Sitaraman committed to releasing the entire ₹ 24,000 crore to States within a week. Mr. Rao requested her to release ₹ 1,000 crore due to Telangana as input tax credit of reversed and lapsed IGST which was unpaid to States for sometime.
The release added that the meeting ended inconclusively after Telangana, West Bengal and Congress led State governments rejected the two options on GST compensation.