New Delhi: Stressed over the delay of payments in goods and services tax (GST) compensation by the Central government, finance ministers from Opposition-ruled states met Union Finance Minister Nirmala Sitharaman in the national capital on Wednesday. "It is embarrassing to come and ask for money," Sitharaman was told by counterparts from six states in including Kerala, Rajasthan, Punjab, Madhya Pradesh, Chhattisgarh and Delhi. The meeting was conducted over delayed transfer of compensation for losses incurred by GST implementation in 2017.

Under the Constitution Amendment Bill, states were guaranteed compensation for 5 years to offset tax revenue shortfall. Even the Congress party raised this issue in the Rajya Sabha last week.

"We had an open discussion with Union Finance Minister over compensation (August and September) for states. The question also includes compensation for next two months... up to November. We are facing issues... can't close jails, schools and hospitals. We need to pay pensions... states have many responsibilities," Punjab Finance Minister Manpeet Singh Badal told reporters after the meeting.

"We can't come to Delhi every day... don't feel good and we feel embarrassed. Those who ask for money are not taken seriously...Government of India is under obligation to pay," he said, adding Ms Sitharaman assured that funds would be released as soon as possible. In a cabinet briefing Sitharaman confirmed that the states had submitted a Memorandum.


"Some state Finance Ministers met me and requested that GST compensation due to them should be released. They have given me a Memorandum. I will definitely look into it. We are all duty-bound to follow the Act. I do not have details readily available with me as to how much GST Compensation amount is due to the states," Sitharaman said.

So far state have not got compensation for the month of August and September and post December 10, compensation for the period October-November will also be due. Delhi deputy chief minister Manish Sisodia said it is not that compensation fund does not have adequate money, around Rs 50,000 crore is there through cess collection.

“We thought we will make appeal to Union finance minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India,” Sisodia said after half an hour long meeting.

GST comprises nearly 60 per cent of tax revenues of states. Many states are already facing deficits and some have already resorted to overdrafts. Earlier this week, the Ministry of Finance had said GST collection stood at Rs 1.03 lakh crores for November. This is the eighth time collections crossed the Rs 1 lakh crore mark. State contribution was Rs 27,144 crore.