Tag: Budget 2022

How much India spends on mental health

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A sound mind in a fit body is crucial to enjoy one’s life to the fullest. Therefore, there has been a greater impetus to spread more and more awareness around the importance of mental health. As part of the effort to improve the mental health infrastructure in the country, the Indian government will institute the National Tele-Mental Health Programme (NTMHP) soon. The NTMHP was first announced by Finance Minister Nirmala Sitharaman in the Union Budget 2022-23.

In India, nearly 14 percent of all adults have or will suffer from a mental disorder of some sort, data from the National Mental Health Survey 2019 revealed. It is estimated that nearly 56 million individuals in the country suffer from some form of depression and another 38 million suffer from anxiety disorders. In economic terms, the loss due to poor mental health in the country comes out to be around $1.03 trillion between 2012 and 2030, according to data from the World Health Organisation.

Despite the high prevalence of mental disorders and the immediate need for support for patients, spending on mental health infrastructure remains low. While mental health found mentioned in the Budget Presentation 2022, the reality is that India’s spending on mental health infrastructure has not risen according to the prevalence of mental health disorders in the country.

While Rs 670 crore was allocated for mental health in the fiscal, it represents just 0.8 percent of the overall healthcare budget.  Of the Rs, 670 crore, about Rs 630 crore is earmarked for the running of NIMHANS (Rs 560 crore) in Bangalore and LGBRI (Rs 70 crore) in Tezpur, two government-run mental health institutions in the country. The remainder is used for establishing centres of excellence and improving the departments of psychiatry in medical colleges across the country.

The health budget estimate of Rs 83,000 crore only is less than 2 percent of India’s overall governmental spending in a year.

While each district also has an additional allocation of a maximum of Rs 83 lakh from the Flexipool of the National Health Mission, there is no information about how much a district is using out of that fund pool.

ALSO READ: Centre to soon launch national tele-mental health programme, toll-free helpline number

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s April-August fiscal deficit at Rs 5.42 lakh crore — 32.6% of FY23 target

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The central government’s fiscal deficit touched Rs 5.42 lakh crore, accounting for 32.6 percent of the annual target in the five months through August 2022, as per official data released on Friday, September 30.

The fiscal deficit is a reflection of government borrowings from the market.

As per the data released by the Controller General of Accounts (CGA), the government’s receipts, including taxes, stood at Rs 8.48 lakh crore or 37.2 percent of the Budget Estimates (BE) for 2022-23.

During the year-ago period, the collection was 40.9 percent of BE 2021-22. The tax revenue stood at about Rs 7 lakh crore or 36.2 percent of this year’s BE.

Also Read: US economy shrinks 0.6% annual rate in April to June period

The central government’s total expenditure was Rs 13.9 lakh crore or 35.2 percent of the BE 2022-23. It was 36.7 percent of BE 2021-22. For 2022-23, the fiscal deficit of the government is estimated to be Rs 16.61 lakh crore or 6.4 percent of the GDP.

According to the data, capital expenditure was 33.7 percent of the full-year budget target in the current fiscal compared to 31 percent in the corresponding period last year, as per the monthly account of the Union government up to August.

In February, while presenting Budget 2022, Union Finance Minister Nirmala Sitharaman set the fiscal deficit target at 6.4 percent of GDP for 2022-23 starting April, compared to 6.7 percent in the previous fiscal year.

Also Read: Rupee is under pressure, but not as bad as 2013: Former RBI Governor Duvvuri Subbarao

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crypto sector urges govt to cut TDS to 0.1%, also reduce 30% income tax

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The crypto industry has urged the government to reduce the TDS on payments towards gains arising from trading in cryptocurrencies to 0.01 or 0.05 percent, from the proposed 1 percent, saying it will hurt retail traders. CoinDCX CEO and Co-Founder Sumit Gupta said 30 percent tax on income from cryptocurrencies is on the higher side and should be reduced.

“At the industry (level), we are engaging with the government and have submitted a presentation on how 30 per cent tax and more than that, 1 per cent TDS is detrimental to the growth of the industry. It will lock up capital for traders and suck liquidity from market. If liquidity is not there, retail investors will suffer,” Gupta told reporters. Meanwhile, he said CoinDCX is also engaging with the traders on its platform to comply with the new tax norms.

Also read: There has been 30-40% dip in India crypto volumes in past 30 days over tax uncertainties: WazirX

“We will try to make it simple at our end but we still continue to engage and keep the dialogue open with the government asking them to bring down TDS (tax deducted at source) to 0.01 or 0.05 per cent. Income Tax of 30 per cent is also on the higher side, which we are requesting them to bring down,” Gupta said. Budget 2022 has made it very clear that it intends to tax crypto assets quite heavily.

Also read: Crypto in Budget 2022-23: Taxed, but is it legitimate?

From April 1, a 30 percent income tax plus cess and surcharges is being levied on such transactions as done in the case of winnings from horse races or other speculative transactions. Budget 2022 also proposed 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.

The provisions related to 1 percent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

Also read: Explained | Why are Indian Web 3.0 and DeFi projects moving to Dubai?

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Parliament passes Union Budget 2022-23

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Parliament on Tuesday approved the Budget 2022-23, with the Rajya Sabha returning the Appropriation Bill 2022 and Finance Bill 2022. The two bills were approved by the Lok Sabha on Friday.

Finance Minister Nirmala Sitharaman had presented the Union Budget on February 1.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget to yield dividends for several years; time for pvt sector to step up investment: RBI article

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nudging the private sector to participate in the economic recovery process, the RBI in an article said the infrastructure-first strategy of the 2022-23 Budget unveiled in Parliament last month will pay dividends for several years to come. The article also said that while the post-pandemic debt consolidation will rely primarily on GDP growth, it needs to be complemented by fiscal consolidation.

“In this context, the 0.4 percentage points reduction in the GFD of the Centre for 2022-23 is a valuable starting point and needs to be matched by the states,” said the RBI article, written by a team of officials led by Deputy Governor Michael Debabrata Patra. The Union Budget, presented in Parliament by Finance Minister Nirmala Sitharaman on February 1, proposed to raise the government’s capital expenditure by 35.4 percent to Rs 7.5 lakh crore.

Also Read | India making steady progress, global crisis notwithstanding: RBI article

Referring to the Budget, the article said, “Our calculations show that the benefits of this infrastructure-first strategy will pay dividends for several years, peaking in 2025-26 the year of the next milestone on the consolidation path. Estimates of the fiscal impulse presented here suggest that despite the consolidation, there will be some stimulus left in the economy till the end of 2022-23. It is now for private investment to respond and participate in the recovery.” The RBI said the views expressed in the article are those of the authors and do not necessarily represent the views of the central bank.

“Fiscal policy exits from crisis modes are much more difficult than going in; in the case of pandemics, it is excruciatingly so. Exiting policymakers have to contend with the razor’s edge trade-off between cliffs and ramps. Too rapid and large a withdrawal of fiscal support risks pushing the economy over the cliff into a sharp downturn,” the article noted.

Also Read | RBI allows microfinance lenders to fix interest rates

On the other hand, the article said the ramp effects of too gently sloped a withdrawal runs the risk of moral hazard and the building up of pressure group. “The Budget for 2022-23 commences this journey of conflicting pulls by seeking to calibrate a thrust to growth with feasible rectitude,” the article said, adding accordingly, it has chosen to go with a reduction in the gross fiscal deficit (GFD) by 0.4 percent of GDP on its path to take it down to 4.5 percent by 2025-26.

The Budget, the authors said, has adopted a risk-minimisation strategy of providing headroom at several levels conservative revenue forecasts; realistic disinvestment target; economy in the recourse to NSSF and cash balances; and conservative nominal GDP projections.

“These buffers will help to secure the budgetary targets set for 2022-23,” it added. It further said that key indicators of debt sustainability have started improving after taking a hit during 2019-21.

Going forward, the Union government debt is projected to stabilise below 60 percent of GDP in the medium-term, but it is large at around 85 percent when juxtaposed with sub-national debt. “While the post-pandemic debt consolidation will rely primarily on GDP growth, it needs to be complemented by fiscal consolidation,” it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PM Narendra Modi says sustainable growth possible only through sustainable energy sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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At a post-Budget meet on Friday, Prime Minister Narendra Modi said sustainable growth was possible only through sustainable energy sources. The first Budget since India joined the pledge to reach net carbon zero by 2070 had a heavy focus on energy transition and climate action.

“Whatever targets India has set for itself, I do not see them as a challenge but as an opportunity,” Modi said while addressing a webinar on “Energy for Sustainable Growth”. He talked of India’s target of achieving 500-gigawatt non-fossil energy capacity and achieving 50 per cent of installed energy capacity through non-fossil energy by 2030.

The meeting was attended by members from the ministries of power, petroleum, renewable energy, coal, mines, external affairs, environment, and forest and climate change.

Prime Minister Narendra Modi said the world was witnessing depletion of all types of natural resources and that in such a scenario, a circular economy is the demand of the hour. “We have to make it a mandatory part of our lives,” Modi said.

Also Read: Explained: The hydrogen economy and how India plans to steer it

Referring to the recently announced National Hydrogen Mission, the Prime Minister said India can become a hub of green hydrogen given its inherent advantage in the form of abundant renewable energy power. He asked for private sector efforts in the area.

“Provisions have also been made in this year’s Budget regarding battery swapping policy and interoperability standards. These will reduce the problems faced in the use of electric vehicles in India,” he said.

He said the Budget 2022 announcement of Rs 19,500 crore for high-efficiency solar module manufacturing will help in making India a global hub for manufacturing and R&D of solar modules and related products. India is providing leadership in global collaborations like International Solar Alliance.

Also Read: All you need to know about National Hydrogen Policy (first phase)

Modi emphasised that along with energy production, energy-saving is equally important for sustainability. “You should work on how to make more energy-efficient ACs, efficient heaters, geysers, ovens in our country,” he advised the industry.

He gave an example of the promotion of LED bulbs at a large scale. He said that first, the government brought down the cost of LED bulbs by promoting production and then 37 crore LED bulbs were distributed under the Ujala scheme.

“This led to saving of 48,000 million Kilo Watt Hour electricity and saving of about Rs 20,000 crore rupees in the electricity bills of poor and middle-class families. Annual carbon emission also saw a decline of 4 crore tonnes. Local bodies are saving Rs 6,000 crore every year due to the adoption of LED bulbs in street lights,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Don’t ask for tax exemptions, it is embarrassing: Revenue secy Tarun Bajaj

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Monday made it clear once again that it was moving away from tax exemptions. While Finance Minister Nirmala Sitharaman said India needs to “widen its tax base”, revenue secretary Tarun Bajaj said tax breaks “only benefit the superrich”.

“We have a new income tax regime without exemptions which will never take off if we keep giving exemptions,” Bajaj said at a post-Budget 2022-23 interaction with the industry in Chennai. “We should have higher tax slabs, lower tax rates not based on tax arbitrages that we have created in too many products.”

On long-term capital gains, Bajaj said: “In 2019, 80 percent of the Rs 75,000 crore of capital gains were made by people earning Rs 50 lakh and more. Can you beat this? Please don’t ask for these exemptions. It’s embarrassing. We are already accused of inequity, the rich are becoming richer and the poor are becoming poorer.”

“We are closing our eyes and allowing tax exemptions to no-profit education institutes. Donations coupled with tax breaks will benefit only the superrich,” the revenue secretary said.

Finance secretary TV Somanathan also said: “Please tell us here where we can raise more taxes painlessly, this will help us spend more. For education, for GDP spend to be raised to 6 percent, the tax to GDP ratio will need to be doubled from the current 10-11 percent.”

Also Read: Budget 2022 Highlights: FM Sitharaman defends no change in income tax slabs

During the meeting Bajaj said the government might touch 11 percent on tax to GDP ratio next year.

Bajaj also said states are “going to have a problem” as goods and services tax compensation will stop after July. “Revenue neutral rate (RNR) for GST was 15.3 percent. Now it’s down to 11.6 percent,” he said. RNR is a structure of different rates established to match the current revenue generation with revenue under GST.

Somanathan said on Monday: “It has been made very clear that schemes like Remissions of Duties and Taxes on Exported Products (RoDTEP) are not entitlement schemes. Their budget will grow by 10 percent every year. Exporters should know this.”

On health, Somanathan said the health ministry might be looking into CGHS (Central government health scheme) as rates have not been revised for a decade. Economic affairs secretary Ajay Seth also said the government is focusing on enhancing health infrastructure in tier 2, tier 1 cities with long term partnerships with industry.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PM Modi exhorts India Inc to make agriculture sector ‘modern and smart’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stressing the need for reducing imports of edible oils and pulses, Prime Minister Narendra Modi on Thursday asked corporates to come forward and help farmers in increasing domestic production of these essential food items. Addressing a webinar on positive impact of the Union Budget 2022 on the agriculture sector, the Prime Minister exhorted Indian business houses to help in branding and promotion of Indian millets.

He also talked about “a huge opportunity” for the corporate world in the field of nano-fertiliser which is going to be a “game changer”. The Prime Minister called upon startups and private investors to create a pan-India network of soil testing labs and said there is a need to create awareness among farmers so that they keep getting their farm soils tested on a regular basis.

Modi said the focus of the Union Budget 2022-23 is on making Indian agriculture modern and smart, and highlighted the seven-pronged strategy outlined in the document presented in Parliament on February 1 by Finance Minister Nirmala Sitharaman. He further said, “There is a huge demand for pulses and oil seeds in our country. The corproate world should come forward. This is an assured market for you (corporates). What is the need of importing?” The businesses, the Prime Minister said, can have arrangement with farmers to purchase pulses and oil seeds. He noted that agriculture insurance system provides protection against crop losses.

Also Read: Russia-Ukraine crisis unlikely to affect Indian agriculture: Kaveri Seeds

“There should be a study of India’s food requirement,” Modi said, as he emphasised on meeting all food requirements through domestic production, instead of imports. He said the government is targeting to increase domestic production of edible oil by 50 per cent in the coming years.

It is to be noted that India imports 60-65 per cent of its edible oil requirement. As per industry data, the country’s edible oil import bill shot up to Rs 1.17 lakh crore in 2020-21 oil year ending October 2021, compared to Rs 72,000 crore in the year ago period.

Modi said the government’s objective is to increase farmers’ income and reduce input cost. Referring to the Budget, he said it focuses on making Indian agriculture “modern and smart”. Seven main avenues, including promotion of natural farming along Ganges, have been suggested in the Budget to achieve the goal, he added.

The Prime Minister called upon agriculture universities and farm scientists to make efforts to create awareness about natural and organic farming. He highlighted that in the last seven years, his government has initiated many new systems and improved the old ones for the entire agriculture value chain, from seed to market.

Modi said the agriculture budget has increased manifold in just six years and farms loans have also been increased by 2.5 times in seven years.

Also Read: What is kisan drone? Key facts you should know

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

View | How extended timeline for reduced corporate tax rate benefits manufacturing companies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Union Finance Minister Nirmala Sitharaman on February 1, 2022, announced several initiatives in her paperless Budget, which if implemented in the true spirit should help the government accomplish its objective and commitment towards making India a global manufacturing hub as envisioned by the Prime Minister.

The government through the Taxation Law (Amendment) Ordinance, 2019, on December 12, 2019, provided relief by introducing a new section, 115BAB, of the Income Tax Act, 1961 (“Act”), which provided for a tax rate of 15 percent [with applicable surcharge and cess, the effective tax rate (‘ETR’) comes to 17.16 percent] for domestic manufacturing companies set up on or after October 1, 2019, subject to satisfaction of certain prescribed conditions.

The purpose of enacting Section 115BAB was to attract investment, create jobs, and stimulate overall economic growth. However, the cumulative impact of the COVID-19 pandemic has resulted in some delays in the formation/registration of new domestic companies, as well as the commencement of manufacturing or production by such companies, if they have been setup and registered.

In order to provide relief to such companies, the Finance Minister through Budget 2022 has proposed to amend section 115BAB so as to provide the benefit by extending the timeline with respect to the commencement of manufacturing or production of an article, from March 31, 2023 to March 31, 2024.

This amendment will take effect from April 1, 2022, and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years. Section 115BAB of the Income-tax Act provides for an option of concessional rate of taxation at the rate of 15 percent for new domestic manufacturing companies provided that they do not avail of any specified incentives or deductions and fulfill certain other conditions as prescribed.

Also Read | PLI scheme: Five firms submit Rs 1.53 lakh cr proposals to set up semiconductor, display plants

Sub-section (2) of section 115BAB of the Act contains the conditions required to be fulfilled by such companies:
–Clause (a) of said sub-section (2) provides that the new domestic manufacturing company is required to be set up and registered on or after October 1, 2019 and is required to commence manufacturing or production of an article or thing on or before March 31, 2023, which is now amended to March 31, 2024.
–New domestic manufacturing company should not be formed by splitting up or reconstruction of business already in existence.
–Such new domestic manufacturing company should not use any machinery or plant previously used in India for any purpose. Also, the company can use old plants and machinery, the value of which does not exceed 20 percent of the total value of the plant and machinery used by the company.
–New domestic manufacturing company should not use any building previously used as a hotel or convention centre
–New domestic manufacturing company should not be engaged in any business other than manufacturing or production of any article or thing and research in relation to, or distribution of such article or thing manufactured or produced by it.

However, a company willing to opt for beneficial sections would not be entitled to various tax exemption/deduction available under the Act as prescribed under section 115BAB being:
–tax exemption/deduction available under the sections 10AA (tax holiday for SEZ units),
–additional depreciation in terms of section 32(1)(iia),
–additional deduction for investment in machinery under section 32AD,
–deduction for tea/coffee/rubber development account available in terms of section33AB,
–deduction under section 33ABA (site restoration fund),
–weighted deduction for expenditure on scientific research 35(1)(ii) or (iia) or (iii), 35(2AA), 35(2AB)
–capital expenditure for specified business under section 35AD,
–expenditure on agriculture extension projects in terms of section 35CCC or deduction under 35CCD for skill development project or
–any other deduction under Chapter VI-A under the heading “C – deductions in respect of certain incomes” other than section 80JJAA of the Act

Further, the company will not be allowed any set-off of losses carried forward from earlier years if such losses are attributable to any of the deduction/exemption provisions referred in above paragraph and the MAT provisions under section 115JB shall not be applicable to companies opting for sections 115BAB

As the section is newly introduced, its provisions have not been tested judicially so far.

This amendment has brought in the much-anticipated relief for companies that had plans for commencement of production but encountered delays and disruptions as well as for firms that had initiated the process but were unable to make significant progress on account of the pandemic. The amendment further offers additional time for many more taxpayers to jump on board and benefit from this incentive.

Also Read | View: Manufacturing in India needs reforms without caveats

Corporate tax rates are critical in attracting inbound investments to any country. Countries across the world have decreased corporation tax rates in recent years in order to encourage investment, consumption, and labour market involvement.

India is competing with countries such as Singapore (17 percent), Ireland (12.5 percent), the United Kingdom (19 percent), the United States (21 percent), Vietnam (20 percent), Thailand (20 percent), Taiwan (20 percent), and others with new corporation tax rate of 15 percent, respectively. The reduction in the business tax rate is in line with worldwide trends and is a well-known strategy for attracting investments.

The manufacturing sector plays a pivotal role in the growth and development of an economy. By incentivising the setting up new domestic manufacturing entities, India is trying to achieve the dual objective, one being promoting domestic players to set up manufacturing facilities thereby accomplishing vision of ‘Atma Nirbhar Bharat’ as well as attracting investments and promoting international players to set up manufacturing facilities in India to accomplish the objective of making India a global manufacturing hub.

Also Read | Factories of the future: Digital transformation in manufacturing

The author Vijay Dhingra is Partner, Parul Shah is Manager and Nikhil Sangtani is Deputy Manager with Deloitte Haskins and Sells LLP. Views expressed are personal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Few states may need to be given GST compensation after June

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Overall goods and services tax (GST) revenues are growing at a strong clip but the uneven growth registered by a few states probably indicates all is not well.

The government’s October-December GST data shows states such as Himachal Pradesh and Haryana clocked a 0-3 percent growth in revenues. Uttarakhand clocked a negative growth, while revenues of Bihar and West Bengal have fluctuated from 30 percent-plus growth to 6-10 percent growth levels during the said period.

Even for big states such as Rajasthan and Madhya Pradesh, the GST revenue trend has shown major fluctuations, probably indicating the collection trend has yet to stabilise fully.

Also Read: Government may propose ‘new formula’ to bring Aviation Turbine Fuel under GST ambit

Selective compensation not easy

Given this scenario, sources told CNBC-TV18 the government might be needed to extend GST compensation beyond June for a few states, especially the hilly ones. In their opinion, an arrangement may need to be worked out by the GST Council.

However, the constitution guarantees compensation for GST shortfall to all states and not a select few. Also, whichever state receives compensation after June, will eat into the revenue share of other states. Even widening the number of items for levying compensation cess or increasing the sin goods rate of 28 percent are not feasible options.

Also Read: GST overhaul likely soon; 3 tax slabs, exemption cuts, rate hikes on the cards

Backlog of unpaid GST compensation 

There is also the possibility of the GST compensation backlog stretching till July FY23 when the guaranteed support ends.

According to sources, an estimated backlog of Rs 30,000-40,000 crore may be carried over into the next fiscal year, given the previous year’s unpaid liabilities due to poor collections, compounding impact of 14 percent guarantee, and the fact that the Central government borrowed only Rs 1.10 lakh crore in FY21 to meet the compensation shortfall for states.

In the next fiscal year, the Centre will settle dues for February 2022 till June 2022. Budget 2022-23 allocated Rs 1.20 lakh crore as compensation cess. One lakh crore of this could be used to pay the compensation dues to states and the remaining may be used to service the back to back GST loans. Anything over the estimated Rs 1.40 lakh crore of compensation dues will be settled in FY24.

Also read: VIEW: Changes to GST rules in Budget the joker in the pack

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow