GST Council to discuss demand of CGST and IGST refund in 11 hill states

July 7, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

GST Council to discuss demand of CGST and IGST refund in 11 hill states

Subject : Economy

Section: Fiscal Policy

In News: GST Council is likely to discuss a demand of industrial units located in 11 Himalayan and North-Eastern states for reimbursement of full Central GST and 50% of net Integrated GST (IGST) paid.

Key Points:

Currently, the Centre reimburses 58% of net CGST and 29% net IGST under the Scheme of budgetary support notified in October 2017.
But the industrial units located in the Himalayan and North-Eastern states have been seeking implementation of a mechanism for reimbursement of balance 42% of the CGST and 21% of the IGST paid by them in cash along with appropriate interest.
States are reluctant to reimburse their share of CGST and IGST collection they receive on account of tax devolution citing unsatisfactory revenue growth and implementation of similar schemes by the state to incentive industries.
In the pre-GST era of excise duty, industrial units in J&K, Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura enjoyed a tax holiday.

Scheme of budgetary support (SBS)

The Department of Industrial Promotion and Policy (DIPP) has notified a scheme to extend budgetary support to manufacturing units operating in the backward areas, which were availing central excise benefits under the erstwhile area-based exemption notifications under different Industrial Promotion Schemes of the Government of India.
This includes all the 11 hill states of India, namely, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Manipur, Nagaland, Sikkim, Assam, Tripura, Nagaland and Meghalaya