By CL Jose
Centre releases Rs86,912 cr to clear entire GST dues to states
NEW DELHI/June 01-2022: The Government of India has released the entire amount of GST compensation payable to States up to May 31, 2022 by releasing an amount of Rs86,912 crore, according to an official release on June 1 from the Ministry of Finance, New Delhi.
While Kerala received Rs5,693 crore, the largest amount Rs14,145 crore was released to Maharashtra, whereas Assam received the smallest amount of Rs232 crore as GST dues.
Balance of compensation payable up to January 2022 was at Rs47,617 crore, dues for the months of February and March, 2022 were to the tune of Rs21,322 crore, whereas dues for the months of April and May, 2022 amounted to Rs17,973 crore.
The official statement said that the decision to release the dues 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.
”This decision has been taken despite the fact that only about Rs25,000 crore is available in the GST Compensation Fund. The balance is being released by the Centre from its own resources pending collection of Cess,” the statement added.
Compensation period ends in June
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 with effect from July 1, 2017.
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.
In order to meet the resource gap of the States due to short release of compensation, Centre has borrowed and released Rs1.1 lakh crore in 2020-21 and Rs1.59 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.
“With the concerted efforts by Centre and States, gross monthly GST collection including Cess has been showing a remarkable progress,” it further said.