States Yet To Receive Rs 37,134-Crore GST Compensation For FY21, Government Says
Compensation amounting to Rs 37,134 crore for the year ended March 2021 is pending to states and union territories.
Goods and service tax compensation to states continues to be delayed as a result of the economic disruptions of the Covid-19 pandemic.
GST compensation amounting to Rs 37,134 crore for the year ended March 2021 and Rs 14,664 crore during April-September 2021 is pending to states and union territories, Minister of State for Finance Pankaj Chaudhary said, citing provisional data.
He was responding to a question raised during the ongoing winter session of the parliament.
“As per the decision of GST Council, Rs 1.1 lakh crore for FY 2020-21 and Rs 1.59 lakh crore for FY 2021-22 has been released to states/ UTs (union territories) as back-to-back loan to meet the resource gap of the States/UTs due to shortfall in GST compensation,” the minister said in a statement.
As the GST compensation fund was unable to meet the requirement at the time, the central government has released compensation based on availability to make up for the shortfall.
The release of this amount was also front-loaded to states to help them take up capital expenditure during the ongoing financial year. The devolution amount of central taxes to states for November was doubled to help them maintain liquidity.
The statement also said that GST compensation for financial years 2017-18, 2018-19 and 2019-20 was already paid to the states and a part of the compensation payable in FY21, amounting to over Rs 1.3 lakh crore, was released.
“The Centre is committed to release full GST Compensation to the States/UTs as per GST (Compensation to States) Act, 2017, for the transition period by extending the levy of compensation cess beyond five years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme,” the statement said.
The fitment committee’s recommendation of GST rate rationalisation and discussion on whether the current slabs need to be increased is slated to be on the agenda of the next GST council meeting, tentatively in January 2022.
A group of ministers headed by Karnataka Chief Minister Basavaraj Bommai has been tasked with submitting a report on rate rationalisation and review the current rate slab structure. The panel is expected to suggest, measures, including merger of tax rate slabs that’s required for a simpler rate structure.
The group has held two meetings but is yet to submit a report, Chaudhary said in response to another question.