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GST Council fixes IGST devolution error; releases Rs 24,000 crore to states paid lower share

Dipak Mondal     October 6, 2020

The GST Council has decided to release an amount of Rs 24,000 crore to some states, which had received lower share of the Integrated GST (IGST) due to erroneous calculation earlier. However, the states, which had got more than their share under the IGST devolution formula, will not be asked to immediately return the excess amount.

Finance Minister Nirmala Sitharaman informed the media after the 42nd GST Council meeting that a committee has been formed under Bihar Deputy Chief Minister Sushil Modi to work out a plan to get the states which had received more than their share of IGST refunds to return the excess amount without burdening them too much.

"We know that this is the time when all the states need money, and so we cannot ask them to return the excess IGST funds they received earlier. So, while the Council has agreed to release Rs 24,000 crore to states which received a lower share earlier, the states which received higher share will be asked gradually to return the excess fund," she said.

The issue of wrong devolution of IGST arose due to quick distribution of the IGST amount of Rs 1.65 lakh crore in 2017-18 between states and the Centre even before arriving at a formula for devolution. Later, even after the formula for devolution was arrived at, the anomaly continued.

As a result, many states which did not need to receive IGST refunds as per the formula, received refunds. Some states received more than their share while others received less than their share of refunds.

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