Under the Goods and Services Tax (GST) law, states were guaranteed to be compensated bi-monthly for any loss of revenue in the first five years of GST implementation from July 1, 2017.
The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.
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.
“Centre is committed to release full GST Compensation to the States/UTs 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,” Sitharaman said.
Giving details of GST compensation yet to be released to the states for current fiscal ending March, the minister said Rs 53,661 crore is yet to be released for the 2021-22 fiscal.
Sitharaman further said GST compensation for financial years 2017-18, 2018-19, 2019-20 and 2020-21 has already been paid to the States/UTs.
“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,” she said.
In a separate reply, Minister of State for Finance Pankaj Chaudhary said the total GST collection during the current fiscal till February is over Rs 13.33 lakh crore. This include Central GST mop up of over Rs 2.43 lakh crore, Integrated GST of over Rs 6.87 lakh crore, State GST of over Rs 3.11 lakh crore and cess of Rs 90,442 crore.
“CGST is credited to Consolidated Fund of India (CFI) while SGST is credited to the Consolidated Fund of respective States. Out of this total IGST collected by the Centre, Centre received Rs 3,09,150 crore and Rs 2,60,467 crore have been received by the States by way of settlement (regular & adhoc) of IGST till February, 2022,” Chaudhary said.
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