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Gujarat govt seeks Rs 12,000 crore GST compensation from Centre; says need 'financial assistance'

Though the state is in dire need of "financial assistance" in the form of GST compensation, Gujarat Deputy Chief Minister Nitin Patel said the Centre's hands are also tied due to its dwindling cess revenue

twitter-logoPTI | August 28, 2020 | Updated 11:34 IST
Gujarat govt seeks Rs 12,000 crore GST compensation from Centre; says need 'financial assistance'
Under the Central GST Act, states are entitled for a compensation for any loss of revenue in the first five years of GST implementation from July 1, 2017

The Gujarat government on Thursday said the state is supposed to get a compensation of Rs 12,000 crore from the Centre under the Goods and Services Tax (GST) Act. Though the state is in dire need of "financial assistance" in the form of GST compensation, Gujarat Deputy Chief Minister Nitin Patel said the Centre's hands are also tied due to its dwindling cess revenue.

Patel, who holds the finance portfolio, took part in the crucial GST Council meet via video conference on Thursday. "The main agenda of this meeting, attended by finance ministers of all states, was to find out a way to compensate states for the revenue shortfall due to coronavirus.

Also read: Big hole to fill! States need Rs 1.5 lakh crore GST compensation in FY21 so far

"Gujarat is supposed to get Rs 12,000 crore towards GST compensation," Patel said in a statement. "Though we need money to smoothly run the state, the Centre says its difficult to pay this time," said Patel. He added that the total GST compensation figure for all states comes to around Rs 3 lakh crore.

Under the Central GST Act, states are entitled for a compensation for any loss of revenue in the first five years of GST implementation from July 1, 2017. "Till now, the Centre was using cess revenue on luxury items to give us compensation. But this time, chances of compensation from that source are less because the Centre's cess revenue has also taken a hit," said Patel.

Also read: GST Council proposes special RBI window to fund revenue shortfall, states ask for 7 days to decide

The options deliberated at the GST Council meeting included the Centre taking loan to pay compensation to states, said Patel. States have been asked to revert with their suggestions in seven days, he said.

Also read: GST collection shortfall stands at Rs 2.35 lakh crore due to COVID-19 impact

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