Naveen Patnaik asks finance ministry to decide on CST compensation

While Union govt has been releasing CST compensation to states up to 2012-13, no decision is taken yet on compensating states from 2013-14 to 2016-17

Having ratified the 122nd Constitutional Amendment Bill for roll out of the Goods & Service Tax (GST), Odisha has revisited its old demand for compensation against loss suffered by states due to curtailment of CST (central sales tax) rate.

Chief minister Naveen Patnaik has sought the attention of Union finance minister Arun Jaitley on pending compensation of states.

"As you are aware, states are facing financial constraint due to a slowdown in the economy and the loss of revenue on account of reduction in rate of CST during 2013-14 to 2016-17 have further impacted the financial position. The Union government should take immediate decision for compensation of CST loss to the states for this period", Patnaik wrote to Jaitley.

The empowered committee of state finance ministers (on GST roll out) at a meeting held in Bhubaneswar in January 2013 had recommended compensation for states in the light of CST rate being pruned from four per cent to two per cent.

It was decided that the Union government would provide 75 per cent compensation for 2011-12 and 50 per cent for 2012-13. At the same meeting, it was also decided to review payment of full compensation to state governments for 2013-14 and 2014-15 if GST was not implemented in 2013-14.

While the Union government has been releasing CST compensation to states up to 2012-13, no decision has been taken yet on compensating states from 2013-14 to 2016-17.

Odisha's finance minister Pradip Amat had earlier said non-payment of CST dues had triggered a trust deficit between the Centre and the states.

Between 2012-13 and 2014-15, Odisha has raised CST compensation of Rs 2908.82 crore of which the Centre has released only Rs 240.53 crore.