Ahead of the tip of five-year assured compensation interval on June 30, the Centre on Wednesday acknowledged that an quantity of Rs 78,704 crore was but to be launched to the state governments in the direction of absolutely compensating them for his or her Goods and Services Tax (GST) income shortfall for the monetary yr 2021-22.
However, the federal government has already paid GST compensation for 2017-18, 2018-19, 2019-20 and 2020-21.
“Including the assistance released on back-to-back basis, Rs 7.35 trillion has been released to states till now and, currently, only for the year 2021-22, compensation of Rs 78,704 crore is pending due to inadequate balance in the fund, which is equivalent to compensation of four months,” the finance ministry mentioned in a standing report on GST compensation.
At the time of introduction of GST, the Constitution modification supplied that the Parliament, by legislation shall present compensation to states for a interval of 5 years for lack of income because of introduction of GST. Accordingly, the GST Compensation to States Act was legislated which offers for launch of compensation towards 14% year-on-year development over revenues in 2015-16 from taxes subsumed in GST. This compensation cess is credited to the compensation fund and as per the Act, all compensation is paid out of the fund. Currently, cess is levied on gadgets like pan masala, tobacco, coal and vehicles.
Compensation of about Rs 49,000 crore has been launched for 2017-18 from the fund, which elevated to Rs 83,000 crore for 2018-19 and additional to Rs 1.65 trillion in 2019-20. For these three years, nearly Rs 3 trillion compensation was launched to states.
However, the compensation requirement elevated considerably throughout 2020-21 because of impression of Covid on revenues. To be sure that states have ample and well timed sources to fight Covid and associated points, Centre borrowed Rs 1.1 trillion in 2020-21 and Rs 1.59 trillion in 2021-22 and handed it on to states on a back-to-back foundation.
Source: www.financialexpress.com”