Minister of State for Finance added the economic impact due to the pandemic led to greater compensation requirements because of lowered GST Collection.
Minister of State for Finance Pankaj Chaudhury informed the Lok Sabha that nearly Rs 52,000 crore of GST compensation was due to states as of September 2021. He added that the government had released approx Rs 1.10 lakh and Rs 1.59 lakh crore to the staters as back-to-back loans in the fiscal year 2020-21 and 2021-22, respectively.
In reply to a separate question, Chaudhary said the Centre has released Rs 17,000 crore on November 3, 2021, towards GST compensation to states from the compensation fund. This is in addition to GST compensation of Rs 43,303 crore released to states and Rs 1.59 lakh crore as back to back assistance during the current financial year.
As per the GST law, states are to be compensated for any loss arising on account of the implementation of the GST until five years i.e., June 2022. The compensation amount to be paid from the compensation fund is arrived at by levying cess on top of the highest tax slab on luxury, demerit and sin goods.
Under the GST law, states are compensated for any loss of revenue arising on account of the implementation of GST for five years till June 2022.
The total GST compensation pending to states stood at exactly Rs 51,978 crore. He elaborated that Rs 13,153 crore was pending was to Maharashtra, Rs 5,441 to Uttar Pradesh, Rs 4,943 crore to Tamil Nadu, Rs 4,647 crore to Delhi and Rs 3,528 crore to Karnataka. According to him, Arunachal Pradesh, Manipur, Mizoram and Nagaland do not have any GST compensation pending from the Centre.
GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states.
The Minister of State for Finance added the economic impact due to the pandemic led to higher compensation requirements owing to lower GST collection. This was accompanied by the lower collection of GST compensation loss.
Since collections in the compensation fund are falling short of the requirement, for 2020-21 and 2021-22 fiscals the Centre has borrowed funds worth Rs 1.10 lakh crore and Rs 1.59 lakh crore, respectively and passed it on to the states as back-to-back loans.
(With inputs from PTI)