The Central Government is yet to release Rs.78,704 crore of Goods and Services Tax (GST) compensation dues that stand outstanding to states. It is cumulative compensation for four months. The Finance Ministry made a press release on Wednesday, mentioning that the delay is due to inadequate fund balance.
Inclusive of financial assistance released back-to-back, Rs.7.35 lakh crore has been given to states. Further, the Finance Ministry stated that the dues would be paid off when cess accrues in the compensation fund. The period for compensation to states ends in June 2022.
Usually, the 10-month compensation between April and January of any fiscal year is paid during that same year. The February-March compensation is released in the upcoming financial year. Previously, eight out of ten months’ compensation for FY 2021-22 was released to states.
Until now, the Centre has released Rs.7.35 lakh crore compensation to states from GST introduction. It is based on the Central Government’s promise that states will be guaranteed a Year-on-Year (YoY) growth of 14% compared to the FY 2015-16 revenues. Such revenue comprised the state levies of VAT subsumed into the GST regime.
Rs.2.78 lakh crore of compensation was given to the states for FY 2020-21 without anything pending. The press release further added that this amount was released by availing a loan of Rs.1.59 lakh crore in FY 2021-22 and Rs.1.1 lakh crore in FY 2020-21 passed on back-to-back to states.
The compensation went up due to the pandemic in FY 2020-21. Rs.49,000 crores were released for FY 2017-18 from the fund, and it rose to Rs.83,000 crore for FY 2018-19 and Rs.1.65 lakh crore for FY 2019-20.
For any clarifications/feedback on the topic, please contact the writer at firstname.lastname@example.org
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.