Last month, Finance Minister KN Balagopal had stressed extending the GST compensation beyond June next year since the state is already facing a significant revenue deficit.

Kerala Finance Minister K N Balagopal
Money GST Wednesday, October 06, 2021 - 15:25

Kerala Finance Minister K N Balagopal on Tuesday, October 5 said that the Union government has to pay GST (Goods & Services Tax) compensation of Rs 4,466 crore to the state since the 2017-2018 fiscal year. He was replying in the Assembly to a question on GST compensation received from the Union government.    

While in 2017-2018, the balance compensation to be received by the state was Rs 57.32 crore, it was Rs 25.79 crore in 2018-2019. However, in 2019-2020, the state received an excess of Rs 11.40 crore. Again in 2020-21 and 2021-22, the balance due was Rs 1,473.40 crore and Rs 2,921.84 crore, respectively. Adding all of these amounts, the total due to the state is Rs 4,466 crore. 

“According to the Goods & Services Tax Dept data, in 2017-18, Rs 57.32 crore and in 2018-19, Rs 25.79 crore was pending from the Central government as GST share. In 2019-20, we have received an excess amount of Rs 11.40 crore. But in 2020-21, the received compensation cess is less than the compensation amount. Through compensation cess, we got Rs 4905.51 crore and though special window loan, we received Rs 5,766 crore,” he said. 

The minister said that the balance amount of Rs 1473.34 crore for 2020-21 is still pending and the state government has to get it. “We have received the compensation amount regularly in 2017-18 and 2018-19. But in 2019-20, we haven’t received it regularly. The compensation amount for December 2019 to February 2020 was received on 04.06.2020 and the compensation amount for March 2020 was received on 23.07.2020. For 2021, we haven’t received the compensation amount regularly and we have discussed this issue in the GST meeting held on 27.08.2020,” he added.   

Balagopal said that following demand from different states including Kerala, the Union government decided to borrow Rs 11,000 crore to give the compensation amount to the states, and in 2020-21, Kerala received Rs 5,766 crore as compensation. He added that in June 2022, the timeframe to receive the compensation will expire and before that, the state should get the compensation amount. 

Last month, the minister had stressed extending the GST compensation beyond June next year since the state is already facing a significant revenue deficit. Balagopal had said that the state is not getting its due in the wake of devolution recommendations by the 15th Finance Commission.

In July, the minister had met with Union Finance Minister Nirmala Sitharaman and demanded a moratorium on repayment of loans, especially by small borrowers, amid the financial crisis caused by the COVID-19 pandemic. He had also raised other issues, including immediate payment of GST compensation dues. Addressing the media, Balagopal had said that the Union government should immediately release the GST compensation dues as the state was facing a severe financial crisis. 

During his meeting, he also laid down a proposal that the GST compensation framework, which is to end in July next year, should be extended for another five years. He also pitched for increasing the borrowing limit of the state without any conditions.

Also read

Kerala FM seeks extension of GST compensation beyond June 2022

Kerala FM seeks moratorium from banks, GST compensation dues amid pandemic woes

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