If the Centre does not extend the GST compensation from July this year, Maharashtra, which pays the maximum taxes, will lose R30,000 crore annually, a senior official of the state finance department has said.
The Goods and Services Tax (GST) Act guarantees states bi-monthly compensation for any loss of revenue in the first five years of its implementation. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by the states over the base year of FY16. The five-year period ends in June 2022 as the uniform tax regime was rolled out from July 1, 2017.
Despite many states demanding extension of the compensation mechanism beyond June 2022 and Union Finance Minister Nirmala Sitharaman’s acknowledgement of it last month, no assurance has been given to the states so far.
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