GST revenues compensation to states

Why is it in the news?
  • The Union government has expressed concern about the Centre’s ability to meet the compensation needs of states due to lower tax collections in recent months.
  • Ahead of its meeting on December 18, the council wrote a letter to states, seeking suggestions to deal with the situation.
More in the news
  • Background:
(1) The GST Act promises states enough compensation from the Centre to keep their annual revenue growth 14% for five years.
(2) Most prevalent indirect taxes were subsumed by the new GST structure, which came into effect on July 1, 2017.
(3) States are eligible for the compensation till 2021-22.
  • Current Developments:
(1) Several states have recently claimed that they have not got the compensation from the Centre for a few months now.
(2) The delay had put the states in acute financial difficulty and that the Centre has not given any explanation for the delay.
Source
The Hindu.
Posted by Jawwad Kazi on 4th Dec 2019
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