Context:

• Finance Secretary has informed the Parliamentary Standing Committee on Finance that the government is in no position to pay the GST share of States as per the current revenue sharing formula.
• The Finance Ministry recently said that the Centre had released the final installment of ₹13,806 crores of GST compensation for the financial year 2019-20.

Statutory Requirement:

• The GST regime, introduced in 2017, promised that the Centre would pay States full revenue compensation for the first five years, calculated using 2015-16 as the base year, assuming a 14% annual growth rate in a State’s revenue.

Demand of States:

• Thorough discussion on state of economy
• Presenting a new state with prevailing conditions
• Finalize a way for compensation to states.
• Raise loans against future GST cess accruals in order to recompense States.

About GST:

• It is a single indirect tax for the whole nation, one which made India a unified common market
• It is a single tax on the supply of goods and services, right from the manufacturer to the consumer.

About GST Council:

• The GST Council is quasi-legislative–cum– administrative body because it functions both legislative as well as administrative duties as assigned by the Parliament to it.
• Members of GST Council
  • Union Finance Minister- Chairperson
  • The Union Minister of State, in-charge of Revenue of finance-Member
  • The Minister In-charge of finance or taxation or any other Minister nominated by each State Government Members

Reference: https://www.thehindu.com/business/Economy/centre-unable-to-pay-gst-dues-to-states-union-finance-secretary/article32216329.ece#:~:text=Finance%20Secretary%20Ajay%20Bhushan%20Pandey,revenue%20sharing%20formula%2C%20sources%20said.

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