As much as Rs 29,000 crore lying in the Integrated GST or IGST pool has been apportioned between the Centre and states in the month of September.
The central government will get about Rs 14,500 crore and the remaining would be distributed among the states in proportion to the revenue collection in September.
The apportionment would help improve indirect tax position of both the Centre and states, this is the fourth time that IGST funds have been dividend between the Centre and states.
As much as Rs 12,000 crore was settled between them in August, Rs 50,000 crore in June and Rs 35,000 crore in February this year.A policy decision has been taken that when some substantial amount accrues to IGST pool it should be apportioned so that funds do not lie idle with the Centre, the official said, adding Rs 29,000 crore has been apportioned this month.Under GST, the tax levied on consumption of goods or rendering of service is split 50:50 between the Centre and the state. Such tax is known as Central-GST or CGST and State-GST or SGST.
On inter-state movement of goods as well as imports, an Integrated-GST or IGST is levied, which accrues to the Centre. A cess is levied on top of these taxes on sin and luxury goods which make up for the compensation kitty used to make good of any revenue shortfall faced by states on implementation of GST.
Ideally there should be ‘nil’ balance in the IGST pool since the amount should be used for payment of Central GST and State GST.
As some businesses are ineligible to claim the benefits of input tax credit or ITCNSE -0.87 %, the balance gets accumulated in the IGST pool.
The Finance Ministry has targeted monthly GST collections to be Rs 1 lakh crore for this fiscal, but the actual mop up has fallen short of the target month after month. The sole exception was the month of April in which the numbers exceeded Rs 1 lakh crore.The collections stood at Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July and Rs 93,960 crore in August.