Over Rs 52,000 crore in GST compensation is owed to states upto September as per Finance Ministry

The states were due over Rs 52,000 crore in GST compensation as of September 2021, Parliament was informed on Monday.

Giving details of GST compensation released and pending release as of November 24, 2021, Minister of State for Finance Pankaj Chaudhary stated in the Lok Sabha that Rs 1,10,208 crore and Rs 1.59 lakh crore were released to states as back-to-back loans in the 2020-21 and 2021-22 fiscal years, respectively.

He stated that the total GST compensation outstanding through September 2021 was Rs 51,798 crore.

This includes delayed payments to Maharashtra of Rs 13,153 crore, Uttar Pradesh of Rs 5,441 crore, Tamil Nadu of Rs 4,943 crore, Delhi of Rs 4,647 crore, and Karnataka of Rs 3,528 crore.

The states of Arunachal Pradesh, Manipur, Mizoram, and Nagaland have received no GST reimbursement from the Centre.

In response to a second question, Chuadhary stated that the Centre had transferred Rs 17,000 crore from the compensation fund to states on November 3, 2021.

This is in addition to the Rs 43,303 crore in GST compensation distributed to states and Rs 1.59 lakh crore in back-to-back assistance provided during the current fiscal year.

“During 2020-21 (April 2020-March 2021), the Centre released Rs 1,36,988 crore in compensation and Rs 1.1 lakh crore in back-to-back credit assistance,” he said. Under the GST statute, states are compensated for any revenue loss resulting from the adoption of GST for five years, until June 2022.

The amount of compensation to be paid from the compensation fund, which is determined by levying a cess on top of the highest tax slab on luxury, demerit, and sin items.

GST compensation has already been given to states for fiscal years 2017-18, 2018-19, and 2019-20.

According to Chaudhary, the economic impact of the pandemic has resulted in increased compensation requirements due to reduced GST collection as well as lower GST compensation cess collection.

Because compensation fund revenues are falling short of expectations, the Centre has borrowed money worth Rs 1.10 lakh crore and Rs 1.59 lakh crore for the 2020-21 and 2021-22 fiscal years, respectively, and passed them on to the states as back-to-back loans.