The Tamil Nadu government on Thursday urged the Centre to extend the period of goods and services tax (GST) compensation by at least two years beyond June 2022. The state has highlighted that its revenues are yet to recover and a huge revenue shortfall could be expected in the absence of the compensation.
Tamil Nadu chief minister MK Stalin met Prime Minister Narendra Modi in Delhi and handed over a memorandum detailing issues, including GST compensation to the states. In the last five years, there has been a gap between the actual GST revenues realised by the state and the revenue guaranteed. This trend was visible even before the pandemic and the gap has widened after the pandemic, Stalin pointed out.
This year, considering the Covid situation, the Centre continues funding of GST compensation by its open market debt arrangement to meet out shortfall in GST compensation cess collection. Accordingly, out of total compensation of Rs 21,781 crore was receivable by the state in 2021-22, but up to February 2022, the state has received a loan amount of Rs 8,095 crore. The balance compensation of Rs 13,505 crore was pending as on February 28, 2022, in the form of GST arrears to Tamil Nadu. “We urge that this amount may be released at the earliest,” Stalin said.
Business Gang 