TN urge centre to pay Rs 4,055 cr claim

The Tamil Nadu government today urged the union government to pay the compensation claim to the state government due to reduction in Central Sales Tax (CST) and due to implementation of Value Added Tax (VAT) which is in the tune of around Rs 4,055.5 crore.

Addressing the State Finance Ministers meeting, which was chaired by the Finance Minister, in Delhi today Tamil Nadu Finance Minister K Anbazhagan said that Tamil Nadu is yet to receive the full payment of the truncated VAT related compensation which was promised by the Union Government as per the agreed formula. The pending compensation claims, both on account of implementation of VAT and reduction of (CST) rates, amount to Rs 4,055.25 crore.

“ Such withholding of agreed compensation to states, I dare say, certainly will not inspire confidence among the states regarding a fair GST regime”.

The minister also said the proposed Goods and Services Tax (GST) should, in no way, erode states’ fiscal autonomy and this can be ensured only by keeping GST within the ambit of the mandatory provisions of Article 270 of the Constitution of India.

Also, the roadmap towards GST must be carefully chalked out based on consensus and not compulsion. The targeted implementation date of April 1, 2010 is pre-mature and hurried, especially since even VAT, the precursor to GST, has not yet stabilised.

Moreover, it is necessary that fair and revenue neutral tax rates need to be worked out for the states.