GST Council should meet to discuss Rs 1.56 lakh cr compensation for FY 22: WB FM to Nirmala Sitharaman

With states implementing lockdowns as a result of the second Covid-19 surge, Mitra claimed in a letter to Sitharaman on Wednesday that their compensation could be much higher than what the federal government estimated earlier.

“According to the Government of India’s projections, the shortfall in 2021-22 will be Rs 1,56,164 crore, excluding the impact of Covid Wave-2. The payout would now be much higher than what was previously expected as a result of Covid Wave-2 and lockdowns,” he said. Mitra demanded a digital meeting with the FM to discuss solutions to the “deeply distressing” issue.

The GST Council, which last met on October 5, 2020, is required by Article 279A (8) of the Structure to meet at least once every quarter. The assembly was moved again after the state elections.

Mitra said that the federal establishment was being undermined by not holding the Council assembly for the previous two quarters, even just barely.

“I’m concerned that not holding conferences on a regular basis could lead to a belief deficit,” he said.

For FY21, the Centre announced Rs 70,000 crore in compensation for states, with another Rs 30,000 crore announced in March 2021. In March, the Centre paid Rs 14,000 crore as an ad hoc settlement of built-in GST.

In addition, the Centre had given states Rs 1.1 lakh crore in back-to-back loans to cover the GST reimbursement shortfall in FY21. In March, the finance ministry announced that states and union territories were owed Rs 63,000 crore in GST compensation for FY21.

Mitra’s demand follows West Bengal Chief Minister Mamata Banerjee’s request for a complete exemption from GST, customs duty, and other taxes on Remdesivir injections, oxygen cylinders, concentrators, cryogenic storage tanks, and containers used to treat Covid-19 patients.