The Finance Ministry announced on Tuesday that the Centre had cleared the whole GST compensation due to states by releasing Rs 86,912 crore. The GST compensation fund will release Rs 25,000 crore, while the Centre will disburse the remaining Rs 61,912 crore from its resources pending cess collection.
The entire compensation released is divided into three parts: Rs 17,973 crore for April and May dues, Rs 21,322 crore for February-March dues, and Rs 47,617 crore for compensation payable till January 2022.
“The Government of India has released an amount of Rs 86,912 crore to cover the whole amount of GST compensation due to states until May 31, 2022. This decision was made “to assist states in managing their resources and ensuring that their programs, particularly capital expenditures, are successfully carried out within the financial year,” according to the ministry.
The GST went into effect on July 1, 2017, and states were guaranteed reimbursement for any revenue lost as a result of the introduction of the GST for the next five years.
The compensation fund for bi-monthly GST compensation to states for the years 2017-18 and 2018-19 was released on time.
Covid widened the gap between anticipated revenue and actual revenue reception, including a reduction in cess collection, because the states’ protected revenue has been growing at a 14 percent compounded growth rate but the cess collection has not increased at the same rate.
A cess is imposed on particular commodities in order to provide compensation to states, and the amount collected is credited to the compensation fund.
The Centre has borrowed and released Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 as back-to-back loans to compensate a part of the shortfall in cess collection caused by the short delivery of compensation.
Featured Image: livemint
💫FOLLOW US FOR MORE UPDATES. ❌WE DO NOT HAVE IRRITATING AND SPAMMY NEWSLETTERS. ✅EVERYTHING IS AND WILL BE FREE FOREVER. SEE YOU AGAIN IN YOUR STORIES AND FEED 🙂
