Nirmala Sitharaman Says All GST Compensation Dues Will Be Cleared

“We have announced today that the entire due on the pending balance of the GST compensation will be cleared as of today,” Finance Minister Nirmala Sitharaman said after the GST Council meeting.

The government will clear the entire goods and services tax, or GST, compensation dues of ₹ 16,982 crore from its own pocket today, Finance Minister Nirmala Sitharaman said after a meeting of the council that sets GST rates.

“We have announced today that the entire due on the pending balance of the GST compensation will be cleared as of today. In other words, the entire pending balance of the GST compensation – a total of ₹ 16,982 crore – will be cleared,” Ms Sitharaman said.

“Although this amount is not really available in the compensation fund as of today, we have decided to release this amount from our own resources and the same amount will be recouped from the future compensation cess collection,” said the Finance Minister, who on February 1 presented her last major Union Budget before the general election next year.

Ms Sitharaman said this payment will clear the compensation dues for five years.

The Goods and Services Tax (Compensation to States) Act 2017 allows the government to charge a cess that will be paid to the states to make up for money lost since July 1, 2017, when the GST was implemented. The switch to GST had led to loss of revenue for several states, for which they need to be compensated for five years counting from July 2017.

Some of the other decisions the GST Council took today are:

No GST on tags, tracking devices or data loggers; it was 18 per cent earlier.

No GST on “coal rejects” when they are supplied to or by a coal washery.

Services supplied by courts and tribunals will be taxed under the reverse-charge mechanism.

Late fee for delayed filing of annual returns to be rationalised.

GST on pencil sharpeners reduced from 18 per cent to 12 per cent.

No GST on loose rab gur (liquid jaggery); it was 18 per cent earlier.

GST on pre-packaged and labelled rab gur (liquid jaggery) reduced from 18 per cent to 5 per cent.

The GST Council has accepted a Group of Ministers’ (GoM) recommendation on capacity-based taxation on paan masala and gutka.

The GoM’s report on setting up tribunals has been accepted with minor modifications.