Centre Owes States Rs.37,134 Crore GST Compensation for FY 2020-21
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The Central Government owes the states Rs.37,134 crore in Goods and Services Tax (GST) compensation for the financial year 2020-21, said the finance ministry in a statement. This data was given in response to a question asked by Janata Dal (United) MPs Dinesh Chandra Yadav, Rajiv Rajan, and Kaushalendra Kumar’s question on the GST dues not being paid to the states.

Explaining the reason for the delay, the ministry said that the economic impact of the pandemic has led to higher compensation requirements due to lower GST collections. But, at the same time, there is a lower collection of compensation cess.

Of the pending dues, the maximum amount is owed to Maharashtra at Rs.6,723 crore, followed by Karnataka at Rs.3,528 crore, Gujarat at Rs.3,145 crore, Uttar Pradesh at Rs.3,125 crore, and Tamil Nadu at Rs.2,894 crore. These dues have significantly reduced since the parliament conducted their monsoon session. The government also said they do not owe any dues to 21 states, including Bihar, Chhattisgarh, Rajasthan, and Kerala.

The ministry mentioned that the Centre is committed to releasing the full compensation to the states and Union Territories for the transition period. This will be done by extending the compensation cess levy beyond five years to meet the shortfall and servicing the loan through a special window scheme. The Central Government had borrowed Rs.1.1 lakh crore under the special window scheme.

The statement also said that GST compensation for FY 2017-18, 2018-19 and 2019-20 was already paid to the states. A part of the compensation that was payable in FY 2020-21 that amounts to Rs.1.3 lakh crore, was also released.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in

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