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Andhra Pradesh finance minister Yanamala Ramakrishnudu today asked the Centre to release the compensation that was promised for the loss of revenue due to phasing out of Central Sales Tax (CST) as a measure of building confidence among the states for rolling out the Goods and Services Tax (GST).
He raised the issue at a meeting held by the Empowered Committee of state finance ministers with the 14th Finance Commission in Delhi on Wednesday. He also demanded that the compensation mechanism should involve an independent body for the release of the amount.
The minister said the loss of revenue to the state due to the implementation of GST would be around Rs 4,000 crore and the same should be fully compensated by the Centre.
The finance minister’s views on the payment mechanism comes against the backdrop of the unpaid claims of over Rs 6,000 crore in compensation due to the undivided AP on account of the phasing out of the CST. According to the minister, the total loss incurred by the undivided AP was around Rs 7,200 crore.
While demanding the Centre to keep petroleum products outside the purview of the GST, the minister, however, said agriculture products should not be exempted under the GST as the loss of revenue would be considerable.
“In case they are exempted, permanent production-linked compensation to the state should be provided and the successive finance commissions should be asked to make recommendations thereof,” he told the commission.
