Nirmala Sitharaman Says All GST Compensation Dues Will Be Cleared

In a major development, the Indian government has announced that it will clear the entire pending balance of Goods and Services Tax (GST) compensation dues of Rs 16,982 crore today from its own resources. Finance Minister Nirmala Sitharaman made this announcement after a meeting of the council that sets GST rates.

“Although this amount is not really available in the compensation fund as of today, we have decided to release this amount from our own resources and the same amount will be recouped from the future compensation cess collection,” said Sitharaman.

The move is expected to provide much-needed relief to businesses and traders who have been facing financial difficulties due to the delay in the payment of GST compensation. The compensation is given to states to make up for any revenue loss due to the implementation of GST.

Apart from this, the GST Council has made several other important announcements. Services supplied by courts and tribunals will now be taxed under the reverse-charge mechanism, and the late fee for delayed filing of annual returns will be rationalized.

The Council has also reduced the GST on pencil sharpeners from 18% to 12% and removed the tax on loose rab gur (liquid jaggery), which was earlier taxed at 18%. The tax on pre-packaged and labelled rab gur has also been reduced from 18% to 5%.

Furthermore, the GST Council has accepted the recommendation of the Group of Ministers (GoM) on capacity-based taxation on paan masala and gutka. The GoM’s report on setting up tribunals has been accepted with minor modifications.

Overall, these decisions by the GST Council are likely to have a positive impact on the economy and make GST compliance easier for businesses. With the pending GST compensation dues cleared, traders and businesses can look forward to better financial stability and increased confidence in the tax regime.