19 JUL 2021: The Government has paid all the GST Compensation dues to the States for the financial years 2020-21 and 2021-22. This was stated by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in the Lok Sabha today.
The Minister stated that the GST compensation cess levied under Section 8 of the GST (Compensation to States) Act, 2017 is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the act. The States are being compensated for any loss of revenue arising on account of implementation of GST for five years out of the Compensation Fund as per Section 10(2) of the said Act. GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states.
The Minister further stated that the economic impact of the pandemic has led to higher compensation requirements due to lower GST collection and at the same time lower collection of GST compensation cess. GST compensation of Rs. 91,000 crore has been released to all States/ UTs to partly meet the compensation payable for the period April’20 to March’21 as the amount in GST Compensation Fund was not adequate to meet the full compensation requirement. Details of GST compensation yet to be released to each State is as per Annexure.
Giving more details, the Minister said that few States have requested for payment of GST Compensation to States on account of loss of revenue due to implementation of GST as per GST (Compensation to States) Act, 2017 and in addition the general request from the States is like a revision of FRBM limit, an additional fund for procurement of medical equipment and increasing the devolution grant etc. Central Government has considered various such requests and is committed to providing all possible assistance to States.
The Minister stated that the issue of GST Compensation to States has been deliberated in the 41st and 42nd GST Council meetings and accordingly, FY 20-21, the Centre had borrowed Rs. 1.1 lakh crore under a special window and passed on to the States as back-to-back loan to help the States meet the resource gap due to short-release of compensation on account of inadequate balance in the Compensation Fund.
The Minister further said that subsequent to deliberations in the 43rd GST Council meeting, it has been decided that the Centre is borrowing Rs. 1.59 lakh crore from the market through a special window in current FY and passing it on to the States/ UTs as a back to back loan inappropriate tranches as was done in last year. As per this decision Rs. 75,000 crore has been released to States/ UTs on 15.07.2021.
In addition, depending on the amount available in the Compensation Fund, the Centre has also been releasing the regular GST compensation to States to make up for GST revenue shortfall, the Minister stated.Disclaimer: We donot claim that the images used as part of the news published are always owned by us. From time to time, we use images sourced as part of news or any related images or representations. Kindly take a look at our image usage policy on how we select the image that are used as part of the news.