GST: Centre Releases Compensation Dues Worth Rs 86,912 Crore to States; Details Here


GST Compensation Cleared: The Centre on Tuesday, May 31 said that it has released the entire amount of GST compensation to states, which was due up to May 31, 2022. In a statement, the finance ministry said that the government of India has released an amount of Rs 86,912 crore to the states as part of the GST compensation dues. This decision has been taken despite the fact that only about Rs 25,000 crore is available in the GST Compensation Fund, the finance ministry said in its statement on the day.

The ministry said that the decision was taken to make sure that the capex of states remain on track. “The Government of India has released the entire amount of GST compensation payable to States up to 31st May, 2022 by releasing an amount of Rs 86,912 crores. This decision was taken to assist the States in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year,” read the finance ministry statement.

“This decision has been taken despite the fact that only about Rs.25,000 crore is available in the GST Compensation Fund. The balance is being released by the Centre from its own resources pending collection of Cess,” it added. As the Centre clears dues up to May this year, GST dues for only June 2022 is remaining.

Bi-monthly GST compensation to States for the period 2017-18, 2018-19 was released on time out of the compensation fund. “As the States’ protected revenue has been growing at 14 per cent compounded growth whereas the Cess collection did not increase in the same proportion, COVID-19 further increased the gap between protected revenue and the actual revenue receipt including reduction in cess collection,” said the ministry on Tuesday.

The Centre said that in order to meet the resource gap of the states due to short release of compensation, it 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 loan to meet a part of the shortfall in cess collection. “All the States have agreed to the above decision. In addition, Centre has also been releasing regular GST compensation from the Fund to meet the shortfall,” it added.

Here are the details of GST compensation payable for the past financial years and for the period of April-May of the current financial year:

Dues for the months of April and May, 2022: Rs 17,973 crore

Dues for the months of February and March, 2022: Rs 21,322 crore

Balance of compensation payable upto January 2022: Rs 47,617 crores

Maharashtra got the highest amount of GST compensation dues at Rs 14,145 crore, followed by Tamil Nadu at Rs 9,602 crore and Uttar Pradesh at Rs 8,874 crore.

What is GST? 

Goods and Services Tax was introduced in the country from July 1, 2017 and states were assured for compensation for loss of any revenue arising on account of implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for a period of five years. “For providing compensation to States, Cess is being levied on certain goods and the amount of Cess collected is being credited to Compensation Fund. Compensation to States is being paid out of the Compensation Fund w.e.f. 1st July, 2017,” the finance ministry said.

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