West Bengal finance minister Amit Mitra has written to finance minister Nirmala Sitharaman seeking an urgent meeting of the Goods and Services Tax Council to discuss the critical issue of increasing the compensation of Rs 1.56 lakh crore earmarked for states in FY22.
With states imposing lockdowns due to the second Covid-19 wave, their compensation could be much higher than what the government estimated earlier, Mitra said in a letter to Sitharaman on Wednesday, which ET reviewed.
“As per GoI projection, the shortfall was expected to be Rs 1,56,164 crore in 2021-22, without taking into consideration the impact of Covid Wave-2. Now due to Covid Wave-2 and lockdowns, the compensation will be much higher than what was earlier projected,” he said.
Mitra asked the FM for a virtual meeting to discuss solutions to the “deeply distressing” issue.
The GST Council, which last met on October 5, 2020, is supposed to convene at least once every quarter, as per Article 279A (8) of the Constitution. State elections caused the meeting to be pushed back.
Mitra said that not holding the Council meeting for the past two quarters, even virtually, was undermining the federal institution.
“I fear that not holding meetings regularly may also lead to a trust deficit,” he said.
The Centre had released Rs 70,000 crore as compensation to states for FY21, with Rs 30,000 crore released in March 2021. The Centre also paid Rs 14,000 crore as ad hoc settlement of integrated GST in March.
In addition, the Centre had given Rs 1.1 lakh crore to states as back-to-back loans to make up for GST compensation shortfall for FY21. The finance ministry said in March that Rs 63,000 crore as GST compensation was pending to states and Union Territories for FY21.
Mitra’s demand comes on the heels of West Bengal chief minister Mamata Banerjee seeking full exemption from GST, customs duties and other taxes on Remdesivir injections, oxygen cylinders, concentrators, cryogenic storage tank . and containers, which are used to help treat Covid-19 patients.
Source : PTI