To provide more relief to states in the course of the Coronavirus outbreak, the Finance Ministry plans to allocate another Rs 34,000 crore to states soon as compensation for their revenue loss in the Goods and Servies Tax (GST).
States have so far been paid pending dues until November 2019, and the rest will soon be cleared up in phases, sources said. The finance ministry has cleared Rs 34,000 crore in two tranches pending GST compensation for October and November. The first tranche of Rs 19,950 crore was issued on February 17 2020, while the remaining amount of Rs 14,103 crore was allocated to states and Union territories on April 07 2020.
At times, when states are facing liquidity crunch due to the nationwide lockdown imposed to contain coronavirus spread, Rs 34,053 crore were released. The government has released near Rs 1.35 lakh crore to states and Union Territories as GST compensation cess.
Under GST law, states were promised to be paid for any revenue loss in the first five years of implementation of GST which came into force on July 1, 2017. The shortfall is estimated based on an annual increase of 14 per cent in GST collections by states over the 2015-16 base year.
Also Read: CBIC launches a special GST refund drive in April 2020 for MSMEs
Taxes are levied at different slab rates, including 5, 12, 18 and 28 per cent under the GST structure. A GST cess is levied on luxury, sin and demerit goods in addition to the highest tax level. The proceeds from the cess are used to reimburse states for any loss of revenue.
After the introduction of GST on July 1, 2017, the Center has issued about Rs 2.45 lakh crore as GST reimbursement to states. Rs 48,785 crore was released during July 2017-March 2018, while Rs 81,141 crore was paid to states during April 2018-March 2019.
The government released Rs 17,789 crore and Rs 27,956 crore for April-May 2019 and June-July 2019. Also, Rs 35,298 crore and Rs 34,053 were paid to states as reimbursement for August-September and October-November 2019.
For any clarifications/feedback on the topic, please contact the writer at email@example.com
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.