Presenting the State’s views at the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman in Delhi on Friday, Thiaga Rajan said that the wide gap between the actual revenues realised and the guaranteed revenues protected by the (GST) Act was further exacerbated by the pandemic and the State’s revenues are yet to recover fully.

“Considering the revenue shortfall that is expected, I urge the Union Government to release the pending compensation dues of ₹11,185.82 crore at the earliest, which is pending due to certain procedural formalities. I also request that the GST compensation period be extended by at least two more years,” he added.

Hiking levy on cess antithetical to fiscal federalism

Describing the continuous increase in the levy of cess and surcharge by the Centre as antithetical to the spirit of fiscal federalism, PTR reiterated that the cess and surcharge, which do not form a part of the divisible pool of taxes, as a percentage of gross tax revenue, have increased manifold from 10.4% in 2011-12 to 26.7% in 2021-22. Stating that it has deprived states of their legitimate share of revenue collected by the Centre, he exhorted the Union government to merge the cess and surcharge into the basic rates of tax so that states receive their legitimate share in devolution.

Centre releases ₹17k cr GST compensation to states

The Central government has released ₹17,000 crore to states towards balance GST compensation, taking the total amount released so far this fiscal to over ₹1.15 lakh crore, the Finance Ministry said.