New Delhi: As much as Rs 12,000 crore lying in Integrated GST or IGST pool has been apportioned between the Centre and states.
The central government will get about Rs 6,000 crore and the remaining would be distributed among the states in proportion to their revenue collection in August, an official told PTI. The apportionment would help improve the indirect tax position of both the Centre and states.
This is the third time that the IGST funds have been divided between the Centre and states. As much as Rs 50,000 crore was settled between the Centre and states in June, and Rs 35,000 crore in February this year.
"Funds accumulated in the IGST pool are gradually coming down. This shows that businesses are utilising the accumulated IGST to pay taxes. Also timely payment of taxes and filing of returns have helped in lowering the balance in IGST pool," the official said.
A policy decision has been taken that when some substantial amount accrues to IGST pool it should be apportioned, so that funds do not lie idle with the Centre, the official said. Under GST, the tax levied on consumption of goods or rendering of service is split 50:50 between the Centre and the state. Such tax is known as Central-GST or CGST and State-GST or SGST.
On inter-state movement of goods as well as imports, an Integrated-GST or IGST is levied, which accrues to the Centre. A cess is levied on top of these taxes on sin and luxury goods which make up for the compensation kitty used to make good of any revenue shortfall faced by states on implementation of GST. Ideally there should be ‘nil' balance in the IGST pool since the amount should be used for payment of Central GST and State GST.
As some businesses are ineligible to claim the benefits of input tax credit or ITC, the balance gets accumulated in the IGST pool. Post the amendments brought about in the GST law earlier this month, credit of IGST which includes IGST paid on the port (import of goods) would be first adjusted towards any kind of tax payable under the regime of IGST/CGST/SGST.
“Thereby, this unallocated tax credit on account of IGST would be allocated towards center and state very easily. This would also reduce the hassles of going through GST council approval for adhoc distribution of the same,” AMRG & Associates Partner Rajat Mohan said.
Once the amendments are implemented, a major portion of unmarked IGST credits would be marked to a consumption state, thereby considerably reducing the necessity of ad hoc distribution of IGST revenues, he said.
“This new mechanism would give higher expendable revenues for the states and centre in a transparent and efficient manner,” Mohan said. GST collections rose to Rs 96,483 crore in July, from Rs 95,610 crore in June. Besides, Rs 94,016 crore was collected in May and Rs 1.03 lakh crore in April. Data for August would be released on September 1....