GST compensation: Government clears the air on amount pending to states

The government on Tuesday informed Rajya Sabha that GST compensation of Rs 17,176 crore is pending to states as on June 2022.

Replying to supplementaries during the Question Hour, Minister of State for Finance Pankaj Chaudhary said the Centre is giving GST compensation to states for five years.

He said even during Covid times when no GST was collected, the Government of India had given compensation to states after taking loans of Rs 1.1 lakh crore and 1.59 lakh crore during 2020-21 and 2021-22.

"A total of only Rs 17,176 crore GST compensation is pending as on June 2022," the minister told the house.
Replying to other queries, Finance Minister Nirmala Sitharaman said, "As of now, since we have somewhat cleared all the dues up to June, and about Rs 17,000 crores pending is to be given."

"Details of GST compensation pending for June 2022 for Tamil Nadu is Rs 1200.6148 crores only.Utilisation certificate from a state has not been reached, that cannot be treated as pending one," she told the House.

Responding to another query, she said in 2022-23, education has received more than one lakh crore, and the sector has been given higher priority She also told the House that she and her junior minister were willing to answer any question asked by members, but said "in the process of asking questions, there are panchayats".

"Let's remember, the Finance Commission actually has asked for devolution of funds directly to local bodies. We have given that. The prime minister, in his experience as chief minister, readily agreed to the 14th Finance Commission report. In that, directly money is going to local bodies. They are now sitting on money which can be used for developmental expenditure," she told the members.

She said other than that any programme that is being carried by the state government or local self government through the cess that is being collected, sometimes the central government is giving more than that is collected through cess on education, health, agriculture infrastructure, roads.

"All the cess is being collected for a particular purpose. That particular purpose is being obviously served through the states. Cesses are being collected by the Centre, no doubt. But they can't be kept by the Centre and that has to be spent that year on long term projects, which happens only through the states. Obviously, cess and surcharges which are collected are going only to states," Sitharaman told the House.

"As per provision under Article 270 of the Constitution, all taxes and duties referred to in the Union List, except duties and taxes, surcharge on taxes and duties and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the State. The aforesaid Constitutional provision forms the basis for cess collection and utilisation by the Union Government," the finance minister said in her written reply.

She also said that the Centre collected 28.1 percent of cess and surcharge in gross tax revenue of Rs 25.16 lakh crore in 2021-22.

This was 25.1 percent of Rs 20.27 lakh crore of gross tax revenue in 2020-21 and 18.2 percent of Rs 20.10 lakh crore of gross tax revenue in 2019-20, she told the House in her written reply.