Odisha to urge Centre to compensate Rs 944 crore CST loss

The Odisha government is set to urge the Union finance ministry to compensate it against central sales tax (CST) loss of Rs 943.97 crore for 2014-15.

"The matter (on CST loss) may be taken up with the Department of Revenue, Government of India to release compensation for 2014-15," Saswat Mishra, commissioner, commercial taxes (Odisha) wrote to additional chief secretary, finance.

Due to phased reduction in CST from 4% to 2%, Odisha has been suffering revenue loss. The state government has been repeatedly demanding release of CST compensation, saying it was causing trust deficit between the Centre and the state.

Previously, the Centre had agreed that states will be given compensation of 100%, 75% and 50% for 2010-11, 2011-12 and 2012-13, respectively. This was estimated to cost the exchequer around Rs 34,000 crore. States had demanded Rs 19,000 crore for 2010-11, of which only around Rs 6,000 crore was paid by the Centre.

Citing delay in the rollout of the tax reform — Goods & Service Tax (GST) — Odisha had even demanded restoration of the CST rate to 4% so that the issue of compensation does not arise in the future.