Under GST provisions, the government collects integrated tax for Goods and Services utilization and later share this collection between the centre and states. In a normal case, the government renders power to the GST Council to disburse the collected IGST in a financial year. On the basis of the returns furnished by the registered taxpayers, the settlement takes place in the forthcoming months. Now, the discussion is about unsettled and ownerless integrated GST and the government will share this collection between the states and Centre.
Around Rs 1.8 lakh crore is collected by the government under IGST head in April month. From the collection, approximately Rs 90,000 crore comes under the credit ledger of taxpayers and it will be used by taxpayers for the payment of State or Central GST accountability in future.
This is not very first time that the Centre has to share the unsettled and unclaimed integrated GST with the states. In January 2018, the GST Council announced to divide Rs 35,000 crore collection between the Centre and States after some finance ministers elevated worries for IGST funds staying in standstill position with the government exchequer rather than being utilized in various development purposes.
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As per the government concerns, around Rs. 5,000 crores is included in the IGST collection every month after a settlement with states.
Settlement of integrated GST takes place on the basis of the place where the Goods or services are consumed. Every month end, the consumer state of the products obtains the half portion of GST fund whereas the central government keeps the rest amount as CGST.
A panel is constituted by the government to find out problems in transferring the balance in IGST accounts after settlements with the states. The panel meeting took place on May 29 under the chairmanship of Finance and Revenue Secretary Hasmukh Adhia.
Considering the current scenario, some taxpayers are not eligible to get input tax credit benefit. For example, some companies which are part of oil & gas cannot avail the input tax credit benefits on IGST although they pay GST on it. In some cases, the settlement takes place between the Central and State government on the basis of purchase or consumption of the products.
In some instances, settlement cannot be proceeds between the Centre and State as the GSTR-3B returns do not include the specified place of supply in the list. This facility was previously available in GSTR-2 returns furnishing which was suspended by the government.
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The GSTR-3B returns furnished by buying taxpayers are not required to include the details about the place of supply for the credits revealed, mentioned Abhishek Jain, a partner at an indirect tax EY India. This can be the reason for a hurdle in the final IGST settlement between the Central and State governments.
