State seeks Rs 5K cr GST dues, Centre says it owes Rs 3,000 cr

Ruchika M Khanna

Chandigarh, June 27

The Aam Aadmi Party government is struggling to settle the pending GST compensation claims of Rs 5,000 crore, due from 2017-18 to 2021-22, with the Centre. Considering the “precarious fiscal health” of the state, it is imperative for the state government to get their GST dues at the earliest.

Why contradictory claims

Top officials of the state Finance Department held a meeting with CAG Girish Chandra Murmu, explaining how certain cesses and surcharge on taxes, imposed by the previous state governments, were errantly included in VAT, raising the base revenue for calculating the GST compensation to be given to the state between July 2017 and July 2022. This has narrowed the GST compensation gap that the state was entitled to by around Rs 2,000 crore

While the state government says that an estimated Rs 5,000 crore is due to Punjab for the five years, the Centre claims that it owes the state only Rs 3,000 crore. The claims are being settled now after the government, having participated in GST Council meetings, realised that the formula used for compensating the state was “incorrect and narrowed the GST compensation gap”.

With the compensation period having already ended, the top officials of state Finance Department, led by Finance Minister Harpal Cheema, today held a detailed meeting with Comptroller and Auditor General of India Girish Chandra Murmu, explaining how certain cesses and surcharge on taxes imposed by the previous state governments “were errantly” included in Value Added Tax, raising the base revenue for calculating the GST compensation to be given to the state in the five-year period between July 2017-July 2022.

“We have received positive signals for the release of the GST dues,” a senior functionary in the department told The Tribune.

It is learnt that for the five years, the cess, imposed by Punjab Infrastructure Development Board, and surcharges on VAT were included under the VAT head. “This narrowed the GST compensation gap that the state was entitled to by around Rs 2,000 crore. After the present government took over and realised the anomaly in calculation, they have been regularly taking up the issue with the Centre. The office of CAG of India is now assessing the issue and we are hopeful of a quick resolution. Once we get this due, the state will have more fiscal room for carrying on its development works,” a senior functionary in the department told The Tribune.

Recently, the Centre had also reduced the borrowing limit of Rs 18,000 crore on the pretext that the state government had made a shift to the Old Pension Scheme and would not deposit the pension contribution to the Pension Fund Regulatory and Development Authority (PFRDA).

Other than this, the Centre has also stopped the grant of Rs 2,600 crore (Special Assistance Grant for Development of Capital Assets) and Rs 800 crore grant under the National Health Mission. The state has also not received its dues under the Rural Development Fund. All these issues are also being taken up by the government with the Centre.