New Delhi: The Centre has released over Rs 1.65 lakh crore as Goods and Services Tax (GST) compensation to states for 2019-20 financial year including Rs 13,806 crore for March, the Finance Ministry said Monday. “The Central Government has recently released GST compensation of Rs 13,806 crore to states for March 2020. Taking this amount into account, entire compensation up to 2019-20 has been released to states,” the ministry said in a statement.
The total amount of compensation released for 2019-20 is Rs 1,65,302 crore whereas the amount of cess collected during the year was Rs 95,444 crore. To release the compensation for 2019-20, the balance of cess amount collected during 2017-18 and 2018-19 was utilised, the Finance Ministry informed.
In addition, the Centre had transferred Rs 33,412 crore from ‘Consolidated Fund of India’ to the ‘Compensation Fund’ as part of an exercise to apportion balance of Integrated GST (IGST) pertaining to 2017-18, it said.
Under the GST law, states were guaranteed to be paid for any loss of revenue in the first five years of the 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.
Under the GST structure, taxes are levied under five, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.