Rs 2.78 lakh crore of compensation released to States for 2020-21 itself; nothing is pending for the year

Rs 2.78 lakh crore of compensation released to States for 2020-21 itself; nothing is pending for the year

FILE PIC

The Ministry of Finance has said that an amount of 2 lakh 78 thousand crore rupees towards GST compensation has been released to the States for the financial year 2020-21 itself and nothing is pending for the year. The Ministry in a statement said that it has so far released  7 lakh 35 thousand crore rupees to the States including the assistance released on back-to-back basis. 

It added that currently, only for the year 2021-22, compensation of 78 thousand 704 crore rupees is pending due to inadequate balance in the fund, which is equivalent to compensation of four months. The Ministry said, normally, compensation for ten months of April to January of any financial year is released during that year and the compensation of February and March is released only in the next financial year. 

It said, the GST compensation of eight out of ten months of 2021-22 has already been released to States and the pending amount will also be released as and when amount from cess accrues in the compensation fund.

At he time of introduction of Goods and Services Tax,GST, the Constitution amendment provided that the Parliament, by law shall provide compensation to States for a period of five years for loss of revenue due to introduction of GST.

Accordingly, the GST Compensation to States Act was legislated which provides for release of compensation against 14 per cent  year-on-year growth over revenues in 2015-16 from taxes subsumed in GST.