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Chennai:
Tamil Nadu Chief Minister Edappadi K Palaniswami has written to Prime Minister Narendra Modi over GST compensation of States, stating that he’s “very concerned about two options offered to States after 41st GST Council Meeting”.
“Our stance has been that the Government of India (GoI) has moral and legal obligation to pay compensation for shortfall in GST collections,” he wrote.
The CM additional said, we had additionally indicated that it was for the GoI to seek out the mandatory funds to compensate the states, together with from the Consolidated Fund of India if there was a shortfall within the cess collections. As a by way of media within the 41st GST Council assembly held on August 27, 2020, our representa8ive Thiru D Jayakumar has prompt that the GoI might mobilise sources and lend the funds required to the GST Compensation Fund and that mortgage may very well be serviced via an extension of the GST Cess for just a few years past 2021-22. This was a really affordable and sensible.
“My first concern is that in both the options suggested by the GoI, the states are being required to borrow from the market to make good the shortfall in compensation due. This is administratively difficulty to implement and more expensive,” CM Palaniswami wrote.
Further, the explanations being cited for such an association should not persuasive. Whether the GoI borrows or the State Governments borrow, for ranking companies and others who monitor the macro-economic indicators, it’s the general General Government deficit and borrowing that’s related. Hence, I reiterate Government of Tamil Nadu’s stance that the GoI ought to advance funds to the GST Compensation Cess fund if want be by borrowing out there and repair the debt by an extension of the compensation cess, he added.
“Further, in an effort to reduce the total amount of borrowing in 2020-21, an artificial distinction is being drawn between GST implementation based losses and COVID-induced losses. I am heartened by the clear and explicit statement in the note which has been circulated that under the operative sections of GST (Compensation to States) Act, 2017, compensation is payable for the entire shortfall in revenue collection, even if it is not on account of GST implementation and further that this position has been clarified by the Attorney General and is accepted by Centre,” CM Palaniswami wrote.
As you’re conscious one of the crucial essential fiscal points dealing with the nation presently is the fee of compensation on account of the shortfall within the income post-implementation of GST and to help the laws on the premise of the unequivocal dedication given by the GoI to compensate the States for any income loss. Such compensation is clearly assured within the 101st Constitution Amendment Act and within the GST (Compensation to States) Act, 2017, the Tamil Nadu CM wrote.
So far, no compensation has been launched for the shortfalls within the income assortment since April 1, 2020, he added.
“As on date, a total sum of Rs 12,250.50 crore is due to Tamil Nadu as compensation for shortfall in GST collections, of which Rs 11,459.37 crore have accrues from April to July, 2020,” CM Palaniswami said.
“As you are aware, the States have suffered a severe loss in revenue in the wake of the COVID-19 pandemic and have also been at the forefront of the battle to prevent the spread of the disease,” he added.
“Considerable additional expenditure of nearly Rs 7,000 crore has already been incurred towards upgrading health facilities, providing medical supplies and towards relief measures for the most affected.For the economy to restart effectively, State Governments also need to ensure that regular budgetary expenditure on on-going schemes and programmes pick up. Hence, State Governments are in immediate need of resources,” Tamil Nadu CM wrote.
(Except for the headline, this story has not been edited by NDTV employees and is printed from a syndicated feed.)
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