Centre Will Not Renege On GST Compensation To States: Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on Monday assured states that the Centre will not "renege" on the promise of goods and services tax compensations.

The delays to pass on the money are due to a slip in GST collections and the states have nothing to be embarrassed about, she said.

The remarks come at a time when states like Maharashtra and Kerala have been demanding the GST compensations sooner.

"It is certainly their right, I am not denying. At the same time, I am also making clear to say that I am not reneging on that. States will be given. We are certainly not reneging on it,” she said.

"I admit that the payments which had to go the compensation head have not been given for two months slot," Sitharaman said, addressing the Times Group’s India Economic Conclave via video conferencing.

The GST Council, the highest decision-making body for the indirect tax, is slated to hold its meeting on Dec. 18.

"I do not want them (states) to feel embarrassed because it's not their fault nor is it personally my fault," she said, admitting that the GST collections have been much lower than expectations.

She attributed the dip in GST collections to a slip in filings due to natural calamities and also due to a slowdown in consumption that has a direct impact on collections.

"I am working with the states. Each of them have taken a lot of effort from their end to improve GST collections. I guess with their efforts and Centre and revenue department officials...the prospects of improving GST collections is likely to go up," she said.

When asked about reports of a revision in GST rates, the finance minister said there is no such call to review.

"I don't think, I am even talking about raising or rationalising the slabs at all at this stage. But eventually at some time the GST Council would want to talk about it, but I am not readying myself for this particular meeting on this particular issue," she said.