No provision for CST compensation to States in additional expenses proposals

States and public sector oil marketing companies may not get their dues this fiscal as the Finance Ministry has not made any provision for compensation for phasing out Central Sales Tax and domestic LPG direct benefit transfer.

The first Supplementary Demands for Grants tabled in Parliament on Monday is silent on the two issues. However, the Ministry has promised that compensation will be provided as committed to States in the current fiscal.

In the first batch of Supplementary Demands for Grants, the Government sought ₹12,529.48 crore more to meet the expenditure on fertiliser subsidy and subscription to international bodies.

GST issue Compensation to States is crucial for the implementation of the Goods and Services Tax (GST). Total dues of around ₹34,000 crore are to be paid for phasing out CST (a tax levied on inter-State trade which goes to Centre). The Centre and the States have agreed to pay out this compensation in three instalments, starting this fiscal.

“We will need to see the revenue and expenditure trend in the next couple of months before seeking approval of Parliament for the payout,” a senior Finance Ministry official told BusinessLine . He indicated that provision for the first instalment of ₹12,000-13,000 crore may be made in the next supplementary demands for grants.

LPG Direct Benefit dues The Supplementary Demands for Grants makes no mention of compensating the oil companies for domestic LPG direct benefit transfer. According to oil marketing companies, the Government owes them ₹1,500 crore. The companies were hopeful of getting this through the fresh demands for grants.