Updated: September 25, 2020 8:55:20 am
The government, instead of transferring the full amount of the GST tax to the GST compensation fund, withheld it in the CFI and used it for other purposes. (Proceedings)
Citing the opinion of India’s Attorney General, Finance Minister Nirmala Sitharaman told Parliament last week that there was no provision in the law to compensate states for the loss of GST revenue from the Consolidated Fund of India (CFI). .
However, India’s Comptroller and Auditor General (CAG) found that the government itself violated the law by withholding Rs 47,272 crore of GST compensation in the CFI during 2017-18 and 2018-19, and used the money for other purposes. . which “led to an overstatement of revenue income and an underestimation of the fiscal deficit for the year.”
“Audit examination of the information contained in statements 8, 9 and 13 regarding the collection of the tax and its transfer to the GST
Cess Compensation Fund, shows that there were short credits to the Fund from the GST Compensation Cess collections totaling Rs 47,272 crore during 2017-18 and 2018-19, ”said the CAG.
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“The short credit was a violation of the GST Compensation Cessation Act of 2017,” said the national auditor in his report on the accounts of the Union government, which were presented in Parliament on Wednesday, the last day of the session. Monsoon.
According to the provisions of the GST Compensation Cessation Act, it is required that all the assignment collected during one year be credited to an unexpired fund (GST Compensation Cessation Fund) that is part of the Public Account, and it is intended to be used specifically to compensate states for lost revenue.
However, the government, instead of transferring the full amount of the GST tax to the GST compensation fund, withheld it in the CFI and used it for other purposes.
“The amount for which the tax was paid in the short term was also withheld in the CFI and made available for use for purposes other than those provided by law,” said CAG. “The short credit of taxes collected during the year led to an overstatement of revenue income and an underestimation of the fiscal deficit for the year,” he said.
In detail, the report says: “During 2018-19, there was a budgetary provision of Rs 90,000 crore to transfer to the Fund and an equal amount was budgeted to deliver to States as compensation. However, although Rs 95,081 crore was collected during the year as GST offsetting assignment, the Revenue Department transferred only Rs 54,275 crore to the Fund.
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“From the Fund he paid Rs 69,275 crore (including an opening balance of Rs 15,000 crore in the Fund) as compensation to the Estates / UT. This resulted in savings of Rs 35,725 crore on account of the short transfer to the Fund and of Rs 20,725 crore on account of the compensation payment to states / UTs versus BE of Rs 90,000 crore each per transfer and compensation payment ”, the CAG said.
On September 18, responding to the debate on the first batch of Supplemental Grant Claims for the current financial year in Lok Sabha, Sitharaman said: “Cess ke dwara jitna compensation collect hota hai, woh hota hai compensation jise state ko dena hota hai. .. agar cess collection mein kuchh nahin hai, to nahin hai. “(The compensation that is collected through the tax is the compensation that must be given to the state … If no tax is collected, there is nothing.). .. The Attorney General has given his opinion that there is no provision in the GST law to grant (compensation) from the Consolidated Fund … “
According to the CAG report, the Ministry of Finance has accepted the observation of the audit and has stated that “the proceeds of the rights collected and not transferred to the Public Account will be transferred in the following year.”
“Furthermore, any transfer in the following year would become an appropriation of that year’s resources and would require parliamentary authorization,” the report says.
The CAG has also highlighted the violation of accounting procedure with respect to the GST offset tax.
According to the approved accounting procedure, the GST compensation payment had to be transferred to the Public Account by debit to the Chief Major ‘2047-Other fiscal services,’ the report says. “Instead, the Ministry of Finance operated the Principal Chief ‘3601-Transfer of grants in aid to the States’. The illegal operation has implications in the declaration of aid subsidies, since the GST Compensation Cess is a right of the States and is not an aid subsidy.
“It is recommended that the Ministry of Finance take immediate corrective action,” the report says.
In addition to the GST compensation cessation, the CAG has also mentioned cases of non-transfer of full amounts of other unemployed to their respective reserve funds, including the cessation of roads and infrastructure, the cessation of crude oil, the universal service tax and the national mineral trust tax. .
“The audit noted, however, that of the Rs 2,74,592 crore received from 35 assignments, liens and other charges in 2018-19, only Rs 1,64,322 crore had been transferred to the reserve / board funds during the year and the rest were withheld in the CFI, ”said the CAG.
“Consequently, not only was the fiscal / income deficit underestimated due to the non-transfer of these amounts to Reserve Funds, but the inability of the Ministry of Finance to create / operate essential Reserve Funds makes it difficult to guarantee that taxes, etc. it has been used for the specific purposes envisaged by Parliament ”, he added.
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