The centre has recently decided to withdraw the GST revenue compensation from the states. The centre has decided to withdraw it from July 2022 when the Goods and Service Tax law will celebrate its 5th anniversary. The GST Act was enacted on the 1st of July 2017. According to the former West Bengal Chief Minister Amit Mishra, this extension of GST compensation to states for the next 3-5 years will certainly provide big relief to the states.
This decision to withdraw the GST revenue compensation from the states will affect the very motive and purpose of enacting the Goods and Service Tax Law and will act contrary to whatever has been defined under the Goods and Services Tax law according to the former Chief Minister. He also claimed that all the states irrespective of their political parties have decided to adopt the Goods and Services on the condition that the centre will provide them with the GST compensation to compensate for the financial loss of five years.
In 2016, when this decision was made, no one would know that the world would be hit by the covid 19 pandemic that started in 2019. Covid 19 pandemic has made the wreckage of economy according to the Mitra, who was the then finance minister of West Bengal. He also stated the partial lockdown restrictions over the last three years have also affected the decision made by the empowered committee of the West Bengal in 2016.
He has also stated that the covid 19 has affected our economy and financial sector in the worst way. It has put our economy under huge stress. The pandemic is continuing to affect our economy. The supply chain and the MSME sector is in wreckages with high inflation and high unemployment. The unorganised sector which provides unemployment to more than 90% of labourers in India has become severely crippled. The GDP of India is yet to reach the pre-pandemic levels and is not likely to reach the desired growth as stated by the former finance minister.
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