Dip in GST cess mop-up to hit states hard: Mitra

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West Bengal finance and industries minister Amit Mitra who also was the head of the empowered committee of state finance ministers for GST rollout was worried about the slow growth of GST cess collection in the last few months. This would leave the finances of the states in serious jeopardy, feels Mitra. The Bengal FM was deeply concerned that whether the Centre can pay GST compensation to states following the massive fall in growth of GST cess collection. While speaking at a conference on ‘West Bengal, Poised to Lead, Business & Beyond’ organised by CII, Mitra indicated that the growth of cess collection has gone down to just 1.5% from targeted 21%. Describing the current situation as grim, Mitra explained that GST cess was meant for giving the compensation to the states as was decided by GST Council during the rollout of the new indirect tax regime.

Taking 2015-16 as the base year, the states are supposed to get a compensation if the growth of tax collection falls below 14% level on year-on-year basis. However, the Bengal finance minister feels that as GST cess has failed to achieve targeted growth figure, and the Centre cannot pay the compensations either. “My concern is whether at all we shall get the GST compensations for February and March,” he added. West Bengal has not received the compensation for January either. “The finances of all the states would be in deep trouble if the Centre does not pay the compensation. Several states as far as we know have resorted to overdraft and ‘ways and means’ funds to meet the commitment,” he added. Mitra also criticised centre for increasing various cess and surcharges which are not part of state devolution.

“In last 2-3 years, we have observed that cess and surcharge has gone up many fold. Centre should have done this by raising taxes and duties then states would have got the benefit but here only centre is getting the money,” he added. The Bengal FM explained that besides GST cess, there was an increase in cess and surcharge on customs duty, excise duty as well, which are not part of GST compensation formula either. Mitra came down heavily on GST network as well as overall financial corruption by added that there has been 14 times increase in suspicious transactions from 62,000 to 14.36 lakh in the last few years. There has been Rs 46,000-crore penal interest as well as in GST, which was not recovered. “There has been a sharp increase in cost of compliance as well post GST,” he added. Later, commenting on West Bengal growth story, Mitra claimed that as per revised estimate of the Centre, West Bengal has achieved a GSDP growth of 10.4% in the current fiscal, which is double that of the country’s GDP of 5%. Last year, too, the state had achieved a 12.5% growth compared to 6-6.5% nationally.

Read More at: https://timesofindia.indiatimes.com/business/india-business/dip-in-gst-cess-mop-up-to-hit-states-hard-mitra/articleshow/74309525.cms