Need GST compensation immediately, say states

New Delhi: Finance ministers and representatives of opposition-ruled states on Wednesday, met Union Finance Minister Nirmala Sitharaman and expressed their concern over the delay in release of GST compensation which they said has put them in an acute financial position.

The finance ministers of Delhi, Punjab, Puducherry and Madhya Pradesh and representatives of Kerala, Rajasthan, Chattisgarh and West Bengal attended the meeting over delay in payment of compensation.Speaking to reporters after the meeting, Punjab Finance Minister Manpreet Singh Badal said the government is under obligation to pay the compensation which is pending for August and September.

"We discussed that issue with the Finance Minister. Even the compensation for the next period (October-November) will be due now, so August-November. Government is under obligation to pay." So far, the state has not received compensation for the month of August and September and post December 10, compensation for the period October-November will also be due, he mentioned.

"The Finance Minister assured us that the compensation will be released as early as possible but she did not specify any timeline," he said.

Asked about meeting with states on GST compensation, Finance Minister Nirmala Sitharaman said, "Some of state finance ministers met and they have requested compensation amount to be given...All of us are duty-bound to safeguard the interest of states."

The Centre will ensure that the rights of states in terms of compensation under the Goods and Services Tax are protected, Minister of State for Finance Anurag Thakur said.

Delhi Deputy Chief Minister Manish Sisodia said it is not that compensation fund does not have adequate money, around Rs 50,000 crore is there through cess collection.

"We thought we will make an appeal to Union Finance Minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India," Sisodia said. Madhya Pradesh Minister for Commercial Tax Brajendra Singh Rathore said the compensation due is about Rs 1,500 crore for August and September. "We have come here to seek what is rightfully due to us. It is as per the law," Rathore said.

Echoing the view, Rajasthan Technical Education and Information & Public Relation Minister Subhash Garg said the state is facing problem due to delay in payment of compensation. It is the money of the states, it should be paid, he added.

For the improvement of Centre-State relations, Garg said there is a need to develop a mechanism and the Finance Minister has heard this concern. The goods and services tax (GST) was rolled out on July 1, 2017. As per the GST law, the Centre compensates states to ensure that their revenue is protected at the level of 14 per cent over the base year tax collection in 2015-16. As per the Section 7 of the GST (Compensation to States) Act, 2017, states that compensation payable to a state for loss of revenue shall be provisionally calculated and released at the end of every two months.