Centre promised to clear CST dues starting next year: AP finance minster Yanamala Ramakrishnudu

Dated 30th December, 2014

The Government of India has promised to release the first installment of the Central Sales Tax (CST) compensation dues to the states before the presentation of annual budget in February 2015.

“We got the assurance from the Union finance ministry the entire dues will be paid in three instalments starting in February next year,” Andhra Pradesh finance minister Yanamala Ramakrishnudu said here today.

According to Ramakrishnudu, the Centre owes Rs 78,000 crore to the states towards loss of revenue due to the phasing out of the CST.

Though the Centre had originally proposed to implement this compensation scheme up to the year 2009-2010 it was extended for three more years from 2010-11 to 2012-13 under pressure from the state governments.

The compensation for revenue loss incurred in the year 2010-11 will be paid in February and the amount related to 2011-12 would be paid in April 2015 while the compensation for the third year would be given in 2015-16, according to the AP minister as well as the finance department officials in Telangana government.

The two states are expected to get about Rs 1,300 crore of which AP would be receiving around Rs 700 crore, the minister said. The total revenue loss for the undivided state on account of CST was projected as Rs 13,000 crore though the actual releases would depend on the finance ministry’s assessment on such a loss. Telangana government has claimed Rs 5,162.9 crore towards its share of compensation.

Following pressure from the states, the Centre had offered statutory guarantee for the compensation of revenue loss under the new tax regime, Goods and Services Tax (GST).

Union finance minister, Arun Jaitley, introduced the GST Bill earlier this month. AP government estimates the compensation of around Rs 7,000 crore following the GST implementation.

(This article is published in The Business Standard on 30th Dec, 2014)