Odisha will receive Rs.496.21 Crore towards compensation for loss of revenue for month of April and May, 2020 from the Union Government.Department of Revenue in Ministry of Finance has informed the State Government about release of compensation amount after Minister Finance Niramala Sitharaman announced the acceptance of GST Council recommendations in this regard.
While Government of India released Rs.20,000 Crore as compensation to all the States on 5 October, Odisha will get Rs.496 Crore 21 Lakh 19 Thousand on account of compensation for loss of GST for first two months of this fiscal.
Finance Minister has also informed that by next week the Centre will also disburse Rs.25,000 crore towards Integrated GST for 2017-18 to those states that received less amount due to the anomalies.
Odisha will also receive its share towards Integrated GST as it received less earlier, officials say.
Normally Centre releases two months Grant In Aid in the next month itself, but it had not released the Grants due to financial stress, officials admit.
Odisha was waiting for compensation of Rs.3647.12 Crore for at least four months-April, May, June and July.
The Goods and Services Tax revenue has slowed to a trickle on account of a slowing economy, the COVID-19 Pandemic and subsequent lockdowns.
As a result, the collections was not be enough to meet the committed 14 Percent annual increase in states’ GST revenue, as provided in the constitutional amendment
Accordingly the Government of India has offered two options to the States for borrowing to compensate GST Shortfall.
Odisha Government has opted for ‘Option One’ offered by the Union Government to compensate GST Shortfall, which is a favorable one officials say.
Option One, says that the State chooses to borrow to cover shortfall in compensation arising only due to the implementation of the GST, and not factoring in the impact of Covid-19.
That cumulative amount is estimated by the Centre at Rs 97,000 crore for all the States.
The State picking this option can borrow via a special window by the Reserve Bank of India that will be coordinated by the Ministry of Finance.
The borrowing will be permitted over and above any other borrowing ceilings eligible under any other normal or special permission notified by Department of Expenditure.
The Centre will endeavor to keep that cost of borrowing at or close to G-Sec yields and subsidize the difference if any.
The State will not have to service this borrowing from its own resources. The interest on the borrowing will be paid from compensation cess as and when it arises until the end of the transition period.
Post the transition period or July 2022, the principal and interest will also be paid from proceeds of the cess, by extending the levy compensation cess as may be required.
The borrowing under this special window will not be treated as debt of the state for any other norms prescribed by the Finance Commission.
