GST compensation should be paid every two months: Harish Rao

Hyderabad: Finance Minister T Harish Rao on Monday urged the Union Finance Minister Nirmala Sitharaman to provide compensation to the States once in every two months as per section 7 (2) of GST Compensation Act.

Participating in the 42nd GST council meeting through video conference along with Chief Secretary Somesh Kumar from BRK Bhavan on Monday, Harish Rao said if the income falls short for the States the Centre should provide GST compensation once in every two months and this money should be compulsorily provided from the Compensation Fund.

He further said that apart from cess, the funds recommended by the GST Council should be compulsorily deposited into the GST Compensation Fund.

The Telangana finance Minister said the section 10 (1) of the Compensation Fund Act says that the loans under option 1 and option 2 are under other funds. The compensation to be provided under option 1 is revised to Rs 1.10 lakh crore and the option 2 it is revised to 1.83 lakh crore. The difference between these two is just Rs 73,000 crore, which should be provided, said Harish Rao. He supported the statement of Chhattisgarh Finance Minister that the loans taken to clear GST compensation and payments should not be under Article 293.

Harish Rao said that as per the 15th Finance Commission, the tax share from the Centre to the state was decreased from 2.43 per cent to 2.13 per cent.

The special package announced by the Centre on Monday, as per the formula of the Commission, would be a loss for the developing states like Telangana, Maharashtra and Karnataka.

He said that the Centre should have considered the population, capital expenditures of the state while announcing the package. The Finance Commission has recommended the Centre to provide one time grant of Rs 723 crore to Telangana as compensation in wake of decreasing the devolution grant from 2.43 to 2.13 per cent.

Stating that the Centre had not accepted this recommendation, the Minister wanted the government to release Rs 723 crore as grant.