New Delhi: Centre has acknowledged for the first that it has no money left to pay the GST revenue to the state governments. Finance Secretary Ajay Bhushan Pandey told the Parliamentary Standing Committee on Finance, headed by BJP MP Jayant Sinha, at a meeting on Tuesday that the government is in no position to pay the GST share of States as per the current revenue sharing formula, sources said.
According to at least two members who attended the meeting, Mr. Pandey’s comments were in response to a question on the revenue shortfall due to the pandemic. The members then questioned him on how the government could renege on the commitment to the States. At this, “he (mr pandey) pointed out that the GST Act has provisions to rework the formula for paying compensation to the State governments if the revenue collection drops below a certain threshold,” one of the members said on condition of anonymity.
The Finance Ministry on Monday said the Centre had released the final installment of Rs 13,806 crore of GST compensation for the financial year 2019-20.