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Updated July 20th, 2021 at 13:53 IST

GST compensation dues for FY-21 and FY-22 paid to states amid COVID-19 crisis: MoS Finance

The Government on Monday, July 19 has paid all the GST compensations due to the States for the financial years 2020-21 and 2021-22 as released in a statement.

Reported by: Kriti Nayyar
GST Compensation released
Credits- PTI | Image:self
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The Union Government on Monday, July 19, has paid all the GST compensations due to the States for the financial years 2020-21 and 2021-22, said Minister of State for Finance Shri Pankaj Chaudhary, in his written reply to a question in the Lok Sabha. Chaudhary stated that the GST compensation cess levied under Section 8 of the GST (Compensation to States) Act, 2017 is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as mentioned in Section 10(1) of the act. 

Economic impact of COVID-19 led to a higher compensation amount

In the statement, the minister further mentioned that the states are being reimbursed for loss of any revenue accruing on account of implementation of GST for five years out of the Compensation Fund as per Section 10(2) of the said Act. The GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been provided to the states.

Talking about the impact of COVID-19 on compensation, he stated that the pandemic led to a higher compensation requirement due to lower GST collection as well as a lower collection of GST compensation cess at the same time. An amount of GST Rs. 91,000 crores has been released to all States/ UTs as compensation payable for the period April’20 to March’21. He stated the full compensation requirement could not be met as the amount in GST Compensation Fund was not adequate. The statement also mentioned that details of GST compensation yet to be released to each State is as per Annexure.

Central Govt committed to provide assistance to states: MoS Finance

The Minister gave out more details stating that few states have made requests on the account of loss of revenue due to implementation of GST as per GST (Compensation to States) Act, 2017. The general requests from states are like the revision of FRBM limit, an additional fund for procurement of medical equipment and increasing the devolution grant etc. adding that the Central Government has taken into consideration these various requests and is keen to provide all possible assistance to the states. 

The 41st and 42nd GST Council meetings have deliberated the issue of GST Compensation to States, the statement mentioned and accordingly the Centre had borrowed Rs. 1.1 lakh crore for the financial year 2020-21 under a special window and passed on to the States as a back-to-back loan to help the States meet the resource gap due to shortage in funds released on account of inadequate balance in the Compensation Fund. 

Subsequent to deliberations in the 43rd GST Council meeting, the minister added, it has been decided that the Centre is borrowing Rs. 1.59 lakh crore from the market through a special window in the current FY and passing it on to the States/ UTs as a back-to-back loan in the appropriate tranches as was done last year. On this account, an amount of Rs. 75,000 crore has been released to States/ UTs on 15.07.2021. The Centre is also releasing the GST compensation to states in order to make up for the shortfall in GST revenue, the minister said. 

Details of gross GST collection (SGST+CGST+IGST+GST Compensation Cess) pre- settlement since March 2020 was tabled in the statement, as follows-

Gross GST Collection (in Crore) 

  • April - 32172 (2020-21), 139708 (2021-22)
  • May-  62151 (2020-21), 102709 (2021-22)
  • June- 90918 (2020-21), 92849 (2021-22)
  • July-  87422 (2020-21)
  • August - 86449 (2021-22)
  • September - 95480 (2021-22)
  • October - 105155 (2021-22)
  • November - 104963 (2021-22)
  • December - 115174 (2021-22)
  • January- 119875 (2021-22)
  • February- 113143 (2021-22)
  • March- 97590(2019-20), 123902 (2020-21)

(Source- https://pib.gov.in/indexd.aspx)

(Image- PTI)

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Published July 20th, 2021 at 13:52 IST

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