Maharashtra demands release of ₹24,000 crore GST compensation

FM calls for suitable sharing with States ‘at this critical juncture to strengthen the fight against the pandemic’

Maharashtra Finance Minister Ajit Pawar on Friday demanded the release of ₹24,000 crore GST compensation pending to the State for the financial year 2020-21 from the Centre, considering the financial position of the State in the COVID-19 pandemic.

Mr. Pawar also demanded tax relief with respect to COVID-19 related medical supplies, as well as medical grade oxygen, oxygen concentrators, pulse oximeters and COVID-19 testing kits.

“Total compensation payable to the State for the year 2020-21 is around ₹46,000 crore. So far, the State has received around ₹22,000 crore. Hence, for the financial year 2020-21, compensation of around ₹24,000 crore is pending,” said Mr. Pawar, adding that the assumptions for calculating compensation for the financial year 2021-22 may be re-examined and corrected so that the State received adequate compensation and was not left with large arrears as it was in 2020-21.

He also said that the economic impact of the pandemic could not be nullified in one or two years. “Hence, it is proposed that revenue protection and compensation for loss may be extended for another five years, that is from financial years 2022-23 to 2026-27,” he said.

Mr. Pawar said that the amount collected out of various cess and surcharges levied on petrol, diesel, etc. were exclusively available to the Central government, which was approximately ₹3.30 lakh crores in the financial year 2020-21. He demanded revenue earned out of these proceeds be suitably shared with the States “at this critical juncture to strengthen the fight against the pandemic”.

Regarding the proposal to convert Quarterly Return Monthly Payment into Quarterly Return Quarterly Payment, Mr. Pawar said that the State understood the need to simplify things for small taxpayers, which was the driving force behind the proposal. “But we also say that the feedback in this regard be studied and proposal be implemented in a smooth fashion, and intended relief reaches the small taxpayers,” he said.

“Un-denatured ethyl alcohol is pure alcohol and is also covered by the expression ‘alcoholic liquor for human consumption’ and is therefore rightly kept outside GST. Denatured alcohol is under GST and is taxed at the rate of 18%. Hence, un-denatured alcohol is rightly taxed under VAT. This position should be continued,” he said.

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