Finance Ministry Says 65% Of Total GST Compensation Shortfall Released To States, Union Territories
A bag showing GST placed outside Parliament House. (Source: PTI)

Finance Ministry Says 65% Of Total GST Compensation Shortfall Released To States, Union Territories

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The Finance Ministry on Monday released the 12th installment of Rs 6,000 crore to states to meet the Goods and Services Tax compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of Goods and Services Tax.

The ministry in a statement said it has released the 12th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released to the 3 Union Territories with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), who are members of the GST Council.

The amount has been borrowed this week at an interest rate of 4.43%.

"Till now, 65% of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs 65,582.96 crore has been released to the States and an amount of Rs 6,417.04 crore has been released to the 3 UTs with Legislative Assembly," the ministry said.

Thus, the total amount released so far in 12 instalments is Rs 72,000 crore at an average interest rate of 4.70%.

The remaining five states -- Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim -- do not have a gap in revenue on account of GST implementation, the statement said.

Also read: Skipping Notice Period? There May Be GST Consequences

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50% of Gross States Domestic Product to the states to help them in mobilising additional financial resources.

Permission for borrowing the entire additional amount of Rs 1.06 lakh crore (0.50% of GSDP) has been granted to 28 states under this provision, the statement said.

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