Lok Sabha Question No. 1892 (UNSTARRED), answered on 2023-03-13
Subject: GST Compensation to Kerala
Ministry: FINANCE
Asked by: M. K. Raghavan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO-1892

TO BE ANSWERED ON MONDAY, THE 13 TH  MARCH, 2023

## GST COMPENSATION TO KERALA

1892.  SHRI M.K. RAGHAVAN:

Will the Minister of FINANCE be pleased to state:

(a)  whether  there  is  any  pending  amount  under  GST  compensation  to  the  State  of  Kerala since the inception of GST and if so, the details of complete amount related to the State since implementation of GST;

(b) whether there is any shortfall in the revenues of Kerala due to the implementation of GST and if so, the details thereof;

(c) whether GST revenue neutrality has been maintained as a result of the implementation of GST in Kerala and if so, the details thereof;

(d) whether the Government has any data regarding the revenues generated for the State of Kerala from indirect taxes before and after the implementation of GST and if so, the details thereof; and

(e)  whether  the  implementation  of  GST  has  reportedly  caused  shortage  of  revenue  for  the State of Kerala and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a)  to  (e):-  Section  7(2)  of  Goods  and  Services  Tax  (Compensation  to  States)  Act,  2017 provides  that  the  compensation  payable  to  a  State  shall  be  provisionally  calculated  and released  at  the  end  of  every  two  months  period,  and  shall  be  finally  calculated  for  every financial  year  after  the  receipt  of  final  revenue  figures,  as  audited  by  the  Comptroller  and Auditor General of India. Accordingly, Government of India has already released the entire amount of provisionally admissible GST compensation to the States/UTs including Kerala for loss  of  revenue  arising  on  account  of  implementation  of  Goods  and  Services  Tax  for  five years i.e.,  from  1st  July,2017  to  30th  June,  2022.  However,  due  to  non-furnishing  of  final revenue figures,  as  audited  by  the  Comptroller  and  Auditor-General  of  India  by  the  State, final adjustments could not be calculated and released/recovered to Kerala for the FY 201718 to FY 2021-22.

As  per  section  18  of  the  Constitution  (One  Hundred  and  First  Amendment)  Act,  2016, compensation to the States for loss of revenue arising on account of implementation of the goods  and  services  tax  for  a  period  of  five  years  can  be  provided  by  a  law  made  by Parliament.  Central  Government  is  committed  for  payment  of  GST  compensation  to States/UTs for five years as per law enacted by the Parliament according to the Constitutional provision. During transition period, the States' revenue is protected at 14% per annum over the base year revenue of 2015-16. The base year Revenue from taxes subsumed in GST in 2015-16 for the State of Kerala is Rs 16821.37 crore.

The Government, on the recommendations of the GST Council, has taken several measures to increase the tax base and improve the tax compliance. Monthly gross GST collection has shown great buoyancy in the current year. In the current financial year up to February 2023, the average monthly GST collection is Rs.1.49 lakh crore as compared to Rs.1.21 lakh crore for  the  same  period  last  year  which  is  23%  higher  than  the  same  period  last  year.  GST revenues of Kerala are as follows:-

(Rs. in crore)

| Year                      | GST Revenue   |
|---------------------------|---------------|
| 2017-18 (since 01/7/2017) | 12,292        |
| 2018-19                   | 21,119        |
| 2019-20                   | 20,085        |
| 2020-21                   | 19,277        |
| 2021-22                   | 23,986        |
| 2022-23 (Till 28.02.2023) | 26,852        |

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