Centre Releases Rs 19,950 Crore GST Compensation To States
Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

Centre Releases Rs 19,950 Crore GST Compensation To States


India’s central government has released Rs 19,950 crore as Goods and Services Tax compensation to states, taking the total amount transferred to them to over Rs 1.2 lakh crore.

In a statement, the finance ministry said Rs 19,950 crore was released to states and union territories on last Monday.

When GST came into force in July 2017, states, which lost powers to levy taxes such as value added tax, were guaranteed to be compensated for any loss of revenue in the first five years of implementation.

This compensation was to come out of a pool that is to be created by levy of cess on certain sin and luxury goods over and above the GST tax rate. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

"With this release of GST compensation, the central government has released a total of Rs 1,20,498 crore towards GST compensation to the states/UTs during current fiscal," the statement said.

The money released compares to only Rs 78,874 crore having been collected as compensation cess in the current FY (till Jan. 31, 2020).

Also read: Prepare For A Double Whammy On GST Compensation Cess

Finance Ministry officials said total GST compensation cess of Rs 62,611 crore was collected in the FY 2017-18, out of which Rs 41,146 crore was released to the states/UTs that fiscal as GST compensation.

In FY 2018-19, Rs 95,081 crore was collected as GST compensation cess of which Rs 69,275 crore was released to the states/UTs as GST compensation.

Officials said that as on March 31, 2019, an amount of Rs 47,271 crore compensation cess collected had remained unutilised after the release of GST compensation to the states/UTs in the 2017-18 and 2018-19.

Also read: GST Is The Biggest Madness Of The 21st Century, Says Subramanian Swamy

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