New Delhi (Sputnik) – India’s new indirect tax system, the Goods and Services Tax (GST), has encountered controversy two years after its launch as opposition-run Indian state governments are up in arms against the centre for not remitting the indirect tax revenue it allegedly owes them.
Six Indian states on Wednesday accused the central government of failing to provide funds associated with the GST, under a law stipulating that New Delhi must cover the revenue losses of the state governments. State ministers have said the payments were not made despite $7.04 billion lying idle in the compensation fund which was introduced alongside the GST.
The State Finance Ministers of Delhi, Puducherry, Rajasthan, Madhya Pradesh, Punjab, Chhattisgarh, and Kerala met the country’s Finance Minister Nirmala Sitharaman, demanding the immediate remittance of the share of indirect tax money that the centre owes to them.
Stating that it feels like being reduced to beggars, Punjab Finance Minister Manpreet Singh Badal said, “We cannot stop running the hospitals and schools. The central government is obligated to pay to us.”
However, the state ministers who met Sitharaman said she did not share the reason behind the delay in release of the central fund nor did she indicate any timeline for the payment.
“We are not able to pay salaries and run our institutions effectively,” said Delhi’s Deputy Chief and Finance Minister Manish Sisodia.
According to government data, the fiscal deficit reached 102 percent of the full-year target in six months between April and September itself.
As per the provisions of GST, launched in 2017, the Central government has to compensate the states for revenue loss as the new regime subsumed the state taxes.
The GST Council, the federal body represented in the centre and the states, will hold a meeting on 18 December. The states have said they will raise the issue of pending payment again in the event that it is not addressed by the central government.