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states were through “ ECONOMY

edged the dues but never mentioned When GST was rolled lisation. “Advisory Council was informed
timelines for making the payment. about submission of the 2020-21 report
She had in the Rajya Sabha on Decem- out on July 1, 2017, and now the Commission is on its next
ber 12 stated that in 2017-18, the total cess task of preparing the report for 2021-26
collected was 62,596 crore, of which period,” said an official release after the
41,146 crore was released to states. The legislation promised to be fifth meeting of the Fifteenth Finance
remaining 15,000 crore was accumu- Commission.
lated in the Cess Fund. In the next year, compensated for the loss Finance Commission Chairman N K
95,081 crore was collected and 69,275 of revenue as not just their Singh reportedly said that the Commis-
crore released to states but “cess accu- sion plans to make recommendations
mulated in the Fund was zero,” she had taxes such as VAT were on Goods and Services Tax (GST), which
said, according to a verbatim transcript being subsumed in the new will be for the GST Council to consider.
of her speech available on the Rajya Sab- The Fifteenth Finance Commission dis-
ha website. levy but also their right cussed issues related to stabilisation of
to levy taxes was being Goods and Services Tax (GST), relation-
t wasn’t clear how no money was ship between GST Council and Finance
accumulated in the Cess Fund in snatched. Commission, and GST compensation be-
I 2018-19 when, according to her, only ing paid to states.
69,275 crore out of 95,081 crore was time and results will not be visible over- Singh also said the Commission was
paid. She also hadn’t said what happens night, according to Bibek Debroy, Chair- planning to make medium-term revenue
to the surplus that accumulates in the man, Economic Advisory Council to the projections in its report. The Council dis-
Fund. According to Sitharaman, dur- Prime Minister (EAC-PM). Noting that cussed the possible macro assumptions
ing the current fiscal year that began in Goods and Services Tax (GST) is a work for the Commission’s award period relat-
April 2019, cess collections till October in progress, he said that when it was in- ing to real growth, inflation etc were dis-
31 were 55,467 crore but compensation troduced, there were people who said the cussed in detail. Matters like the structur-
released to the states was 65,250 crore. new indirect tax regime would lead to in- al shift in inflation, relationship between
“The Government of India has released cremental GDP growth of 1.5-2 per cent. the GDP deflator and consumer price in-
9,783 crore more than the amount “This is regarding the fact that the flation, and possible trajectories of move-
raised through cess collections (this fis- estimate was done by NCAER (National ment in real activity were also discussed.
cal),” she had said in the Rajya Sabha. Council of Applied Economic Research) “Tax revenues and expenditure patterns
Sitharaman recently assured states for the ninth Finance Commission for emerging both at the Union and the
that the Centre will not “renege” on the terminal ideal GST, whereas GST — States level. Possible way to improve tax
promise of GST compensations. The which is work in progress — may take 20 collection for additional resource mobili-
delays to pass on the money are due to years. It is not that you are going to get sation,” the release said. The meeting held
slippage in collections and the states 1.5-2 per cent (additional) GDP growth detailed deliberations on tax revenues
have nothing to be embarrassed about, overnight,” he said. and expenditure patterns emerging both
she said. “It is certainly their right, I am India’s GDP growth rate has fallen at the Union and the states level. Possible
not denying. At the same time, I am also to an over 6-year low of 4.5 per cent in way to improve tax collection for addi-
making it clear to say that I am not reneg- the second quarter of current fiscal. tional resource mobilisation was another
ing on that. States will be given. We are Collections under the GST, which was focus area of the meeting.
certainly not reneging on it. I admit that introduced in July 2017, has remained Advisory Council members were up-
the payments which had to go the com- mostly below the target. The GST col- dated by the Commission regarding the
pensation head have not been given for lections came in at 95,380 crore in additional terms of reference extending
two months slot.” October, down 5.29 per cent from Fifteenth Finance Commission’s term
“I do not want them (states) to feel em- 1,00,710 crore in the same month last till October 2020. As per the additional
barrassed because it’s not their fault nor year, as per government data. This was terms of reference, the Commission
is it personally my fault,” she said, admit- the third consecutive month when GST will submit two reports- one, for the
ting that GST collections have been much mop-up remained below the 1 lakh year 2020-21 and second report for the
lower than expectations. She attributed crore mark, despite festival season. five year period of 2021-22 to 2025-26.
the dip in collections to a slip in GST fil- The council members who attended the
ing due to natural calamities and also due Tax collection meeting include M Govinda Rao, Indira
to a slowdown in consumption that has a Economic Advisory Council of the Fif- Rajaraman, Sudipto Mundle, Omkar
direct impact on the collections. teenth Finance Commission seprarately Goswami, Arvind Virmani, Surjit Bhalla
discussed issues related to GST stabili- and Prachi Mishra.
Impact on economy sation and possible ways to improve tax
The impact of GST on growth will take collection for additional resource mobi- LETTERS@TEHELKA.COM

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