Punjab FM demands immediate release of Rs 50,000 crore by Centre to cover GST losses

New Delhi, Aug 21 (PTI) Punjab Finance Minister Harpal Singh Cheema on Thursday demanded the Centre to immediately release a compensation of Rs 50,000 crore to the state to make up for the "losses" incurred after the implementation of goods and service tax (GST).

After participating in a two-day meeting of the GST ministerial group on health and insurance, rationalising rates, and compensation cess, Cheema claimed that since the implementation of GST in 2017, Punjab suffered a total financial loss of Rs 1.11 lakh crore.

Despite receiving approximately Rs 60,000 crore as compensation from the Centre, Rs 50,000 crore is still pending, he said.

The Central government had announced a five-year compensation package to the states in lieu of financial losses incurred due to GST implementation but this compensation has now been discontinued, a statement issued by the Punjab government claimed.

Cheema said while the Punjab government is not opposed to the rationalisation of GST rates, the Union government must take responsibility for the resulting financial losses to the states.

The BJP-led Centre is continuously undermining the financial structure of the states, which is a significant attack on the federal structure of the country, he alleged.

Cheema also claimed that now the Centre is even evading the release of funds to Punjab, the statement said.

He alleged that apart from GST, Rs 8,000 crore of rural development funds and over Rs 1,000 crore under the prime minister's road scheme are also being withheld.

Cheema added that when GST was implemented, all the states stood united with the country but now when the issue of compensating the states for financial losses is arising, the Centre is turning a blind eye.

The Centre has made 27 amendments to the GST so far and adjusted the rates 15 times, he said.

Now, Prime Minister Narendra Modi has proposed a new tax structure with two tier rates of 5 per cent and 18 per cent, he added, claiming that even if these new changes are implemented, the Central government should take responsibility for compensating the states for the financial losses incurred by them.

Lashing out at the BJP-led Centre for repeatedly making changes to the GST system without reaching a definitive solution, Cheema claimed such uncertainty leads to constant harassment of the taxpayers and a systematic breakdown of the country's financial framework.

He pointed out that during a recent meeting on the compensation cess, the Centre informed that the loan repayment would be completed by October 31, and that the special tax on sin goods, which was a source of compensation for the states, would also be reduced.

Cheema also criticised the GST rate rationalisation, terming it irresponsible.

As an example, he pointed out that while GST exemptions are being given to health and insurance, the sin tax on raw tobacco is being reduced from nearly 100 per cent to 40 per cent.

He argued that reducing the sin tax on harmful goods is in itself an anti-social step.

Cheema also warned that this "gambling" with the tax structure would cause massive harm to the nation, as he dismissed the Centre’s promises as mere rhetoric. PTI SKC ARI