Ajit Pawar asks Centre to compensate Maharashtra for 22K-crore GST losses

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Published on Aug 28, 2020 12:39 AM IST
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BySurendra Gangan, Mumbai

Maharashtra finance minister Ajit Pawar on Thursday urged the Central government for an early release of the pending Goods and Services Tax (GST) losses sustained by the state to the tune of 22,534 crore. Pawar, who participated in the 41th meeting of the GST Council headed by Union finance minister Nirmala Sitharaman on Thursday through video conference, said the Centre should raise loans from the market to pay GST compensation to states and then recover the amount from the cess it has been collecting on certain services.

“Compensating state governments towards their losses in GST collection for five years and helping them in fighting the economic crisis is the responsibility shouldered by the Centre. Almost all the states are bleeding financially, not only because of the financial crisis due to the global pandemic but also owing to the delay in release of GST compensation which is resulting in setback to development works,’’ said Pawar who is also the state’s deputy chief minister.

He added, “It is the responsibility of the Centre to match up the revenue losses owing to the introduction of the GST regime.”

Pawar suggested that the Centre avail loans from the open market at cheaper rates than states. “By raising such loans, the states should be compensated for the losses in a timely manner. The Centre can repay its loans by extending the deadline for the collection of cess beyond June 2022,” he said.

Amid the exhaustive drop in GST collection during the lockdown, Maharashtra collection has dropped by 22,534 crore from April to July 2020. According to the provisions in the Central GST Act, the Centre compensates states towards their losses in the collection. The responsibility has been taken for five years since the roll-out of GST regime on July 1, 2017. The Centre compensates states from the corpus fund accumulated from cess on tobacco, pan masala, cigarette, motor vehicles, petroleum products, etc. In the wake of the drop in cess collection during lockdown, the Centre has not been able to pay the compensations to states.

The losses in GST collection in Maharashtra in April and May were 15,178 crore, while remaining 7,356 crore is from July. With the addition of August figures, the losses are expected to cross 28,000 crore. The monthly estimated GST collection in the state is 9,708 crore, according to an official from the finance department.

The Centre had paid 19,233.65 crore to Maharashtra towards compensation for GST losses in 2019-20; the highest in the country. Most of the losses were sustained in March owing to the lockdown.

Meanwhile, chief minister Uddhav Thackeray, too, expressed concerns on Wednesday over the delay in the release of GST compensation to the states and said there was a need to reconsider GST regime. He was speaking in a video conference convened by Congress interim president Sonia Gandhi with chief minister of non-BJP state governments.

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