A CAG report on authorities funds tabled in Parliament discovered that the Centre did not switch almost 40% of the cesses to the designated funds. “…Out of the Rs 2,74,592 crore received from 35 cesses, levies and other charges in 2018-19, only Rs 1,64,322 crore had been transferred to reserve funds/ boards during the year and the rest was retained in the CFI (Consolidated Fund of India),” the report noticed.
The Centre levies cesses with the acknowledged goal of offering devoted funding to a complete host of actions, from schooling to roads and cleansing the atmosphere.
The outcome of this diversion of cess collections, the CAG mentioned was that, “not only was the revenue/ fiscal deficit understated due to the non-transfer of these amounts to reserve funds, failure of the ministry of finance to create/operate essential Reserve Funds makes it difficult to ensure that the cesses etc, had been utilised for the specific purposes intended by Parliament.”
Further, it identified that there was incorrect accounting of round Rs 10,000 crore from the Central Road Fund, which was proven as non-tax income, and ensuing double counting as the cash had already been accounted for within the tax receipts.
The issues associated to GST allocation, pointed by the CAG, come at a time when the Centre and the states are preventing over the compensation cess and a few of the opposition-dominated states have already flagged the discrepancy.
Last 12 months too, the CAG had reported that devolution of built-in GST of shut to Rs 68,000 crore to states and UTs was inconsistent with the authorized provisions. “Government of India was advised to account for its IGST share correctly, apportion 50% to the states as per the IGST Act, and thereafter also devolve to states their share under Article 270,” the report mentioned.
During 2018-19, Rs 15,001 crore had been devolved to states and UTs. “Audit examination showed that Rs 13,944 crore was left unapportioned under Major Head 0008 and retained in the CFI though the amended IGST Act now provides for a process for ad hoc apportionment of IGST. No reasons were provided by department of revenue for non-apportionment of this balance amount,” the report famous.
Due to “the continued adoption of the erroneous process of devolution of IGST to states and retention of unapportioned balance in the CFI instead of first apportioning IGST between the Centre and states/UTs and then devolving states’ share from the amount apportioned to the Centre”, states obtained much less cash, it concluded.
“This also implies that tax receipts of the GoI were overstated to that extent and the revenue deficit understated during the year,” the CAG mentioned.