A total of ₹7,214 crore is pending under goods and services tax (GST) from the Centre to the Tamil Nadu government, said governor Banwarilal Purohit addressing the state assembly on Wednesday. The governor urged the Centre to be prompt in release of dues to the state. Of the ₹7,214 crore, ₹5,454 is under inter-state GST and ₹455 crore as compensation for the year 2017-18 and another ₹1,305 crore as compensation for the financial year 2018-19. Government sources said they are confident of getting only ₹1,305 crore as the pending amount for this year (2018-19), while for dues for the previous year (2017-18), the Centre needs to introduce an appropriations bill, which is most unlikely.
“Tamil Nadu has successfully embraced the GST despite challenges associated with the transition to a completely new tax regime. However, there has been delay by the Government of India in the release of state’s share of IGST and in the settlement of GST compensation,” said the governor. The Centre is yet to make IGST settlement for the year 2017-18 and this is adversely affecting the state’s finances, he said.The governor blamed 14th Finance Commission devolution, implementations of UDAY scheme and 7th pay commission for government employees for the increasing revenue deficit of the state.
“The revenue deficit is on the rise in recent years mainly due to the devolution formulae evolved by the 14th Finance Commission, UDAY and 7th pay commission,” said the governor. The governor had mentioned the same reasons even last year in his address to the state assembly. The governor also hoped that the Centre will uphold the principles of equity and efficiency and give a fair deal in financial devolution to Tamil Nadu in the 15th Finance Commission award “Out of the total money pending from Centre, ₹5,909 crore is for last year. Tamil Nadu is one of the few states facing the IGST problem, since most products manufactured in the state are sold outside the state.These products cross several states before their sale and hence calculating IGST takes longer time,” said a senior official.
The Tamil Nadu government hopes to get only 40% out of the ₹5,909 crore, provided the Centre moves the appropriations bill as it will deduct the compensation released to the state for lower tax revenue growth last year and devolution as per 14th Finance Commission. “Tamil Nadu is not receiving compensation every month like other states, which don’t have the IGST problem. It is only our state which has this problem and that is why we expect to get only 40% of the total amount pending for last year,” said the official.