‘Disburse full compensation for GST’: EPS urges Modi

Tamil Nadu Chief Minister Edappadi K Palaniswami has written to Prime Minister Narendra Modi seeking the disbursement of the full compensation for the Goods and Service Tax (GST) shortfall for the state.

Dissatisfied with the Union government’s decision in providing the GST compensation, in a categorical statement, the Chief Minister said that he was concerned about the two options provided to the states in the GST council meeting and said that the Centre should ensure that the states get full dues by this year end.

After Kerela, Tamil Nadu too has rejected the Union Government’s suggestion to borrow GST shortfall from the market. In a letter written to Prime Minister Narendra Modi, Tamil Nadu Chief Minister Edappadi Palaniswamy has asked the centre to pay the GST compensation to the states by raising the required funds as a loan by itself.

Tamil Nadu is the first ‘politically friendly’ state to have lodged its concern with the Prime Minister. Tweeting his letter to PM Modi said that so far, no compensation has been released for the shortfalls in revenue collection since April 1, 2020.

The Union Finance Ministry should agree to a mechanism in which the government of India (GoI) raises the required funds as a loan and lends it to the GST Compensation Fund (GSTCF) against future cess receipts, so that the GST compensation can be paid in full to the States in 2020-2021, Palaniswami urged Prime Minister Narendra Modi

In the 41st GST Council meet on August 27, Tamil Nadu suggested GoI could mobilise resources and lend the funds required to the GSTCF and that loan could be serviced through an extension of the GST Cess for a few years beyond 2021-22.

“This was a very reasonable and practical suggestion and was agreed to by almost all States,” the Chief Minister said.