Siddaramaiah also expressed the need for a phased-deduction approach, proposing 10 instalments to address the impact on the state's finances.
Published Dec 06, 2023 | 8:11 AM ⚊ Updated Dec 06, 2023 | 8:11 AM
Karnataka CM Siddaramaiah launches social media campaign against Prime Minister Narendra Modi on Tuesday. (supplied)
Karnataka Chief Minister Siddaramaiah has expressed apprehensions over the Prime Minister Narendra Modi-led Union government’s move to impose sanctions on states’ share of the Integrated Goods and Services Tax (IGST).
Siddaramaiah has penned a letter to Union Minister for Finance Nirmala Sitharaman seeking clarification on the deduction of ₹798.03 crore from Karnataka’s IGST share.
The letter is said to have highlighted the chief minister’s concerns regarding the accumulation of substantial negative balances, amounting to ₹34,000 crore, and requested transparency on the methodology employed for distributing this negative balance among the states.
Additionally, Siddaramaiah expressed the pressing need for a phased-deduction approach, proposing 10 instalments to alleviate the immediate impact on the state’s finances.
In an exclusive conversation with the South First, Karnataka Revenue Minister Krishna Byre Gowda criticised the Union government for deducting the state’s IGST significantly without giving any prior intimation or notice on the matter.
Similarly, after reports emerged indicating that the Union government planned to deduct ₹332 crore from Kerala’s IGST settlement for November, the state’s Finance Minister KN Balagopal penned a letter to Sitharaman appealing to revoke its decision.
Siddaramaiah, in his letter to the Union government, conveyed his apprehensions and sought clarifications concerning the recent provisional settlement of IGST for the return filing month of November.
In a letter directed to Sitharaman dated 1 December, he expressed his concerns regarding the adjustment of ₹798.03 crore from the IGST settlement, labelled as the “Adjustment of Advance Apportionment to make up a shortfall in IGST balance as of 26 December, 2022”.
Acknowledging the complexities inherent in financial matters, Karnataka was keen to gain detailed insights into critical aspects, said Siddaramaiah.
The chief minister, however, questioned the rationale behind allowing the accumulation of substantial IGST negative balances, amounting to ₹34,000 crore, emphasising the potential impact on the state finances.
Second, in an effort to foster better understanding and transparency, Karnataka sought comprehensive information on the total negative IGST balance and the methodology used for distributing this amount among states for recovery.
Furthermore, recognising the need for resources and the challenges linked with lumpsum deductions, the Karnataka government appealed to the Union government for a considerate approach, proposing a phased deduction plan in 10 instalments to alleviate the immediate impact on state finances.
Emphasising the significance of a transparent and collaborative resolution, Chief Minister Siddaramaiah pointed out: “Addressing these concerns will contribute to the effective functioning of the financial ecosystem.”
The Chief Minister sought the guidance and intervention of Sitharaman in this matter, saying such measures would pave the way for a smoother and more sustainable financial environment for all states.
Expressing deep concerns over the unexpected deduction of ₹798.03 crore from Karnataka’s IGST settlement, Revenue Minister Krishna Byre Gowda raised significant issues with the lack of transparency in the process.
He told South First: “The Union government has adjusted the IGST settlement amount to Karnataka. It claims that there was a shortfall in the IGST account which has been subsequently adjusted for all states.”
He added: “There is no explanation on why the shortfall arose and the mechanism of calculation; there was no advanced notice either. If you cut ₹800 crore in a month from us, we need to be prepared for this.”
He also said: “There is no exchange of information or proper notice about the share calculation of IGST and the reasons behind it. Even in the absence of such clarity, if you deduct ₹800 crore without any notice, it will definitely affect our financial situation.”
According to the official website of GST: “A total of ₹5,277.34 crore IGST [was] collected in Karnataka for the month of April 2023, where the settlement amount stands at ₹3,092.38 crore. In the following month, May 2023, ₹3,582.08 crore IGST was collected from the state, where the settlement amount was ₹2,681.87 crore.”
It added: “In the months of June, July, and August 2023, the IGST collection in Karnataka stands at ₹4,143.60 crore, ₹4,300.30 crore, and ₹4,193.21 crore, respectively. The IGST settlement for the aforementioned three months is ₹2,688.90 crore, ₹2,650.12 crore and, Rs 2,626.99 crore, respectively.”
