New Delhi: The Department of Expenditure of Ministry of Finance has released a total amount of Rs 14,077 crore to the State as part of GST compensation since its implementation.
Union MoS, Finance, Pankaj Chaudhary has informed this in a reply in RajyaSabha on Tuesday.
As per his reply, the Centre has released GST compensation of Rs 2348 crore in the financial year 2017-18 while Rs 4241 crore sanctioned in 2018-19.
Similarly, Rs 5332 crore has been released by the Centre during 2019-20 as GST compensation. Due to Covid-19 pandemic, the Ministry has sanctioned partial compensation of Rs 2156 crore during the last financial year (2020-21). No aid has been released to any State during 2021-22.
However, the Centre is yet to release Rs 1389 crore to Odisha as part of the GST compensation due for the financial year 2020-21 and Rs 1349 crore for the first two months of the current fiscal.
GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the States/UTs including Odisha.
For the purpose of payment of compensation to States for any loss of revenue arising on account of implementation of GST for five years, a GST Compensation Cess is levied on select items under Section 8 of the GST (Compensation to States) Act, 2017.
“This is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the act. All releases of compensation to States are done only out of the Compensation Fund as per Section 10(2) of the said Act and not from the Consolidated Fund of India,” the Union Minister said.
The economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess.
GST compensation of Rs 91,000 crore has been released to all States/UTs to partly meet the compensation payable for the period April’20 to March’21 as the amount in GST Compensation Fund was not adequate to meet the full compensation requirement, he said.
The issue of GST Compensation to States has been deliberated in the 41st and 42nd GST Council meetings. Accordingly, in FY 20-21, Centre had borrowed Rs 1.1 lakh crore under a special window and passed on to the States as back-to-back loan to help the States meet the resource gap due to short-release of compensation on account of inadequate balance in the Compensation Fund.
Subsequently, in the 43rd GST Council meeting, it has been decided that the Centre is borrowing Rs 1.59 lakh crores from the market through special window in current FY and passing it on to the States/ UTs as a back to back loan in appropriate tranches as was done in last year, Mr.Chaudhary said.
As per this decision Rs 75000 crore has been released to States/ UTs on 15.07.2021. This amount includes Rs 5722.78 crore released to the State of Punjab. In addition, depending on the amount available in the Compensation Fund, Centre has also been releasing the regular GST compensation to States to make up for the GST revenue shortfall.
The states will be paid full GST Compensation as per GST (Compensation to States) Act, 2017 for the transition period by extending the levy of Compensation cess beyond 5 years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme, he added.