Regarding the GST Compensation Cess, the CAG says that the Central Government has violated the rules. The CAG has said in its report that the government has not put the total amount of GST compensation cess in the CFI by putting it in the public fund.
The CAG said, ‘Information on the audit test of Statements 8, 9 and 13 shows that there was less fund credit in GST compensation cess collection. 47,272 crore less fund credit for FY 2017-18 and 2018-19. This is a violation of the rules of the GST Compensation Cess Act 2017.
What is the provision of GST Compensation Act?
As per the provisions of this act, the total cess collected in any year is credited to the Non-Lapsed Fund (GST Compensation Cess Fund). It is a part of the public account and is used to compensate the GST revenue to the states.
However, instead of transferring the total GST Cess to the GST Compensation Fund, the Central Government has kept it in CFI instead. Later it was used for some other work.
If you understand this report in easy language, in the financial year 2018-19, there was a budget provision to transfer Rs 90,000 crore to this fund. The same amount was to be released to the states as GST compensation. However, this year Rs 95,081 crore was collected as GST compensation cess. The revenue department of the finance ministry transferred only Rs 54,275 crore from this to the compensation fund. Out of this fund, Rs 69,275 crore was released as a GST compensation to states and union territories. There were already 15,000 crores deposited in this fund.
