27th January 2023

Confidant Classes

Competitors' very first choice

Home | LAW | Compensation Cess Fund fiasco

Compensation Cess Fund fiasco

The CAG recently raised objections to the transfer of money from the Cess Compensation Fund to the Consolidated Fund of India, calling the transfer illegal. He showed how the central deficit could have been underestimated by the bad signing.

What are these controversial funds?

  • Under the GST law, the amount collected from the collection of fees during the year is credited to a non-cancellable fund called the GST Expense Compensation Fund.
  • It is part of the public account and is used to compensate the states in case of loss of income.
  • The Consolidated Fund of India is an account that includes income received by the government through tax or non-tax revenue and expenses incurred by it, excluding exceptional items.
  • Following the CAG’s findings, the Center clarified that it had transferred funds to the compensation fund and paid all costs through 2019-2020.

What are the problems with compensation?

  • The Comptroller and Auditor General of India said that transferring the surplus from the Compensation Fund to the Consolidated Fund was illegal.
  • The report comes at a time when the Center has reached consensus on the issue of GST compensation to states due to severe financial stress caused by the covid-19 pandemic and the corresponding closures.
  • According to the law, the central government had guaranteed 14% revenue growth to the states and cover any budget deficits resulting from the implementation of the GST by collecting compensation.

Can the government transfer the surplus from the compensation process?

  • Legally, the Center cannot transfer funds that exceed the compensation fee. The observations made by the CAG were well recognized by the government.
  • For example, in fiscal year 20, total tax revenue was ₹ 95,444 crore, while ₹ 1,65,302 crore was delivered to the states. The Center then transferred the balance of Rs 69,858 million to the Cess Compensation Fund.

What about the fund’s surplus?

  • The current legal structure requires that any surplus from the initial fund be kept in the fund for future deficits. In other words, the background cannot be used by the government for any other purpose, but only for the purpose of providing compensation to States.
  • However, this needs to be reexamined, even more so in the post-covid phase. The current solution to the GST compensation problem was to allow states to borrow while using the right of compensation to bear the cost.

What does this mean for center-state relations?

  • This development will have implications for center-state relations, as several states have raised objections regarding the transfer of surpluses to the consolidated fund.
  • The key issue would be to restore trust between the Center and States. The solution found on the issue of GST compensation due to foreclosure is a positive development as it illustrates the willingness of stakeholders to find solutions. Therefore, cooperative federalism will remain the key in the future.
List of State Governments that Grant Educational Loans for Study Abroad

List of State Governments that Grant Educational Loans for Study Abroad

Study-Abroad Whether it is in Canada, the US, Australia or even the Ukraine, studying abroad is a difficult task to…
Read More
UGC NET December 2022: NTA sets upper age limit for JRF

UGC NET December 2022: NTA sets upper age limit for JRF

UGC NET December 2022 The NTA has decided that the deadline for determining the upper age limit for applying for…
Read More
Foreign Universities Indian Campuses

Foreign Universities Indian Campuses

Foreign-Universities-Indian-Campuses All foreign universities opening their branches in India will be able to conduct courses offline only. UGC Chairman, Mr….
Read More
GUJCET 2023

GUJCET 2023

GUJCET-2023 Gujrat Common Entrance Test (GUJCET) 2023, Registration starts on 6th January 2023. Interested candidates can check the eligibility criteria…
Read More
LSAT-India January 2023

LSAT-India January 2023

LSAT-India January 2023: The deadline to register for LSAT-India is 11 January 2023. Candidates can register at pearsonvueindia.com LSAT-India January…
Read More
Make CUET-PG mandatory for admissions for the next academic session- M Jagadesh Kumar

Make CUET-PG mandatory for admissions for the next academic session- M Jagadesh Kumar

Delhi University has already announced that it will adopt CUET UG and PG for admission to all courses, in all…
Read More
All  DU admissions  will be based on the CUET UG, PG score of the next academic year

All  DU admissions  will be based on the CUET UG, PG score of the next academic year

DU Admissions: Previously, the university conducted its own entrance exam (DUET) for admission to graduate courses. Prepare-for-CLAT-AILET-DULLB DU Admissions: The…
Read More
List of Scholarships Provided by Government of India for Study Abroad

List of Scholarships Provided by Government of India for Study Abroad

Study-Abroad-Scolarships Ministry of Education provides financial assistance to Indian students for higher education abroad. Interested applicants can check the official…
Read More
CLAT 2023 Exam Analysis

CLAT 2023 Exam Analysis

CLAT 2023 Exam Analysis: The Consortium of National Law Universities (NLU) held the Common Law Admissions Test on 18th December…
Read More
CBSE Board Exams Class 10, 12 from February 15

CBSE Board Exams Class 10, 12 from February 15

The data sheet was prepared by avoiding nearly 40,000 subject combinations to ensure that no two-subject combinations fall on the…
Read More

About Post Author

error

Enjoy this? Please spread the word :)