With High Revenue Deficit, Tamil Nadu Depends On Rs 8,684 Crore Due Under GST To Fund Relief Efforts Post Cyclone Gaja

After the havoc caused by Cyclone Gaja, the Tamil Nadu government is facing an uphill task of funding restoration and rehabilitation measures in the affected districts.

Marred by a high revenue deficit, the state government is depending on the centre to provide Rs 8,684 crore, which is due to the state under the Goods and Services Tax (GST) scheme to attenuate its “cash flow constraints”, reports The Hindu.

The figure stated by the TN government is a sum of two components of the scheme which are the GST compensation and the Integrated Goods and Services Tax (IGST), stated an assessment made by the state government.

The problem of revenue deficit can be contained to a large extent if the amount is made available to the state government, said a senior official handling the issues concerning commercial taxes. The revenue deficit is estimated to be around Rs 17,500 crore for the current year.

Chief Minister Edappadi K Palaniswami wrote to the Prime Minister a few days ago requesting his intervention in the matter by providing “suitable instructions” to the Union Finance Ministry for the early release of funds to Tamil Nadu.

Proceeds are to be distributed equally between the Centre and the States in regards to the IGST. The claim of the TN government for the previous financial year of 2017-18 comes to Rs 5,454 crore. This year the state received Rs 3,427 crore towards provisional settlement of IGST.

The AIADMK led government feels disgruntled over the “lack of authentic information” regarding the IGST amount accumulated up until 31 March, 2018. On the other hand, the state government is yet to be paid the Rs 455 crore GST compensation for the financial year 2017-18. The principle of the GST compensation works in such a way that the centre should compensate states’ loss of revenue on account of implementation of GST for five years.