The Ministry said that a major reason is the imposition of GST Compensation Cess, which is entirely used for payment of compensation to the states and flows to states as Grants-in-Aid, in their Receipts Budget.

Resources from the other cesses are allocated to different schemes and programmes in the Union Budget, which are implemented by the states and other implementing agencies. States voice their views on the matter of levy of cesses and surcharges in various forums, including in Parliament. As per provisions laid under Article 270 of the Constitution of India:

"All taxes and duties referred to in the Union List, except the duties and taxes, surcharge on taxes and duties and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the states.

The aforesaid Constitutional provision forms the basis for cess collection and utilisation for Union Government," said the Ministry in the reply. The Ministry informed that a few states have requested for extension of payment of GST compensation beyond the transition period of five years.