More than ₹53,600 crore GST allowance pending release to state this tax: Treasury Secretary


To date, this taxable ₹96,576 crore has been released to states due to GST compensation

To date, this taxable ₹96,576 crore has been released to states due to GST compensation

More than ₹53,600 crore in goods and services tax (GST) compensation for the current tax regime has yet to be released to states, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Tuesday.

To date, ₹96,576 crore has been released to states as a result of GST compensation and an additional ₹1.59 crore has been granted as a back-to-back loan to offset the revenue shortfall due to GST implementation.

Under the GST Act, starting July 1, 2017, states were guaranteed bimonthly compensation for lost revenue for the first five years of GST implementation.

The shortfall is calculated assuming a 14% annual growth in GST collections by states in the base year 2015-16.

The amount of compensation to be paid from the Compensation Fund results from the levying of a levy on the highest tax plate for luxury, damage and sin goods.

“Centre is committed to releasing full GST compensation to States/UTs under the GST (Compensation to States) Act 2017 for a transitional period by extending the collection of the compensation levy beyond 5 years to offset the GST revenue shortfall and the loans borrowed through a special window program,” Ms. Sitharaman said.

The minister gave details of GST compensation that are yet to be disclosed to states for the current fiscal year by March, saying ₹53,661 crore for fiscal year 2021-22 has yet to be released.

This includes £11,563 million to be released to Maharashtra, £6,954 million to Uttar Pradesh, £6,733 million to Tamil Nadu, £5,461 million to Delhi and £4,292 million to West Bengal.

Ms. Sitharaman further said that GST compensation for fiscal years 2017-18, 2018-19, 2019-20 and 2020-21 has already been paid to the States/UTs.

“The economic impact of the pandemic has resulted in a higher compensation requirement due to lower GST collection and, at the same time, lower collection of GST compensation fees,” she said.

In a separate reply, Minister of State for Finance Pankaj Chaudhary said the total GST collection for the current fiscal year to February is above 13.33 lakhcrore. These include over £2.43bn of Central GST recovery, over £6.87bn of Integrated GST, over £3.11bn of State GST and £90,442bn levy.

“CGST is credited to the Consolidated Fund of India (CFI) while SGST is credited to the Consolidated Fund of the respective States. Out of this total IGST collected by the Centre, the Center received 3,09,150 crore and 2,60,467 crore was received by the States in Ways to settle (regular & adhoc) IGST by February 2022,” said Mr. Chaudhary.

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