The Finance Ministry on Wednesday mentioned the Centre has already launched eight months of GST compensation dues to the states for the fiscal ended March 2022 and Rs 78,704 crore is pending because of insufficient steadiness within the cess fund.
In a press release, the ministry mentioned usually, GST compensation for 10 months (April-January) of any monetary 12 months is launched throughout that 12 months and the compensation of February-March is launched solely within the subsequent monetary 12 months.
“… compensation of eight out of ten months of 2021-22 has already been released to States. The pending amount will also be released as and when amount from cess accrues in the compensation fund,” it mentioned.
Under GST important objects are both exempted or taxed on the lowest slab, whereas luxurious and demerit objects appeal to the best slab.
Luxury and sin items appeal to cess on high of the best 28 per cent slab. This cess assortment is used to compensate states for the income loss because of GST rollout.
At the time of GST implementation on July 1, 2017, the Centre had agreed to compensate states for 5 years until June 2022, and shield their income at 14 per cent every year over the bottom 12 months income of 2015-16.
The ministry, additional, mentioned that after bearing in mind the again to again mortgage, Rs 7.35 lakh crore has been launched to the states to compensate for income loss.
“… 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 ministry added.
For 2020-21 fiscal no compensation is pending to the states and a complete of Rs 2.78 lakh crore, which incorporates again to again mortgage, has been launched to states.
During 2017-18, Rs 49,000 crore was launched as compensation to the states from compensation fund. The quantity elevated to Rs 83,000 crore in 2018-19 and additional to Rs 1.65 lakh crore in 2019-20.
“For these three years, almost Rs 3 lakh crore compensation was released to States. However, the compensation requirement increased substantially during 2020-21 due to the impact of Covid on revenues,” it mentioned.
To be certain that states have satisfactory and well timed sources to fight Covid and associated points, the Centre borrowed Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 and handed it on to States on a back-to-back foundation, the Ministry added.
Source: www.financialexpress.com”