Govt clears all GST dues of states so far
New Delhi:
The Finance Ministry on Tuesday said the government has cleared the entire Goods and Services Tax (GST) compensation payable so far by releasing Rs 86,912 crore to the states.
Of this, Rs 25,000 crore has been released from the GST Compensation Fund and the remaining Rs 61,912 crore is being released by the Center from its own resources, pending collection of cess.
Of the total compensation released, Rs 17,973 crore is due for April and May, Rs 21,322 crore for February-March and Rs 47,617 crore for compensation due till January 2022.
“Government of India has released the entire amount of GST compensation payable to the States till May 31, 2022 by releasing an amount of Rs 86,912 crore. This decision was taken to assist the States in managing their resources and ensure that their The expenditure on capital is carried out successfully especially during the program financial year,” the ministry said in a statement.
GST was implemented in the country with effect from July 1, 2017 and states were assured compensation for any loss of revenue caused by the implementation of GST for a period of five years.
In order to provide compensation to the states, cess is being levied on certain items and the amount of cess collected is deposited in the Compensation Fund.
Bi-monthly GST compensation to the states for the period 2017-18, 2018-19 was released on time from the Compensation Fund.
As the protected revenue of states is growing at a compounded growth of 14 per cent, while cess collection has not grown in the same proportion, COVID-19 has further widened the gap between protected revenue and actual revenue receipt, including reduction in cess collection.
To meet the resource gap of states due to low release of compensation, the Center borrowed Rs 1.1 lakh crore in 2020-21 and back-to-back loans to meet a portion of Rs 1.59 lakh crore in 2021-22 issued as. Regarding shortfall in cess collection.
In addition, the Center is also releasing regular GST compensation from the fund to meet the shortfall.