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State FMs urge Centre to merge cesses, surcharges into basic rates of tax

State Finance Ministers on Friday urged Union Finance Minister Nirmala Sitharaman to come forward and play a larger role — in the current uncertain global economic scenario — in improving financial health of the States.

They called for steps such as phasing out of Centre’s practice of resorting to increased levy of cesses and surcharges, which not being part of tax divisible pool tended to reduce the revenue share of the States; continue the system of GST compensation grant for the next five years after June 2022 besides clearing of pending GST compensation dues at the earliest.

These demands and suggestions came at the pre-budget meeting that the Finance Minister Sitharaman had with State Finance Ministers in the capital.

Later in the day, the Finance Ministry announced disbursement of ₹ 17,000 crore to the States towards GST compensation pending for April -June 2022.

Addressing the pre-budget meeting, Tamil Nadu Finance Minister Palanivel Thiaga Rajan said that considering the persistent macroeconomic challenges, the Union Government should come forward and play a greater role to support the States in reviving economic growth in the country.

K N Balagopal, Finance Minister of Kerala, said that the Centre may either take measures to phase out such practice of levy of cesses and surcharges or devise a legally tenable mechanism so that States would be benefited on pro-rata basis. 

Meanwhile, Chhattisgarh Chief Minister Bhupesh Baghel on Friday reiterated the State’s demand of refund of NPS amount, GST compensation and transferring of the amounts collected as ‘additional levy’ from coal block companies. 

He urged Centre to transfer the coal royalty amount of ₹ 4140 crore to the State at the earliest. 

The Chief Minister said Chhattisgarh had requested to continue the system of GST compensation grant for the next five years after June 2022, but it was not increased. He demanded an amount of ₹1,875 crore for GST compensation be settled at the earliest. 

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