Bhubaneswar: The Centre has implemented the Good and Services Tax (GST) since July 1, 2017 with a promise to states that it would provide compensations for their shortfall in revenues.
However, the state government is yet to receive the promised compensation of Rs 2,738 crore.
As per the provisions of GST (compensation to states) Act, 2017, if the states’ GST revenues do not grow by at least 14 per cent over the base year (2014-15), the Centre has to pay the shortfall amount on a bimonthly basis for the first five years from the implementation of the GST Act.
In a written reply (question No 836) in Rajya Sabha, Minister of State (MoS), Finance Pankaj Chaudhary said his ministry is yet to release Rs 1389 crore to Odisha as part of the GST compensation payable for the financial year 2020- 21 and Rs 1349 crore for the first two months of the current fiscal.
The compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states/UTs including Odisha, he said. He further said that the Centre has released a total amount of Rs 14,077 crore to Odisha as part of GST compensation.
As per his reply, the Centre has released GST compensation of Rs 2348 crore in 2017-18 while Rs 4241 crore was sanctioned in 2018-19.
Similarly, Rs 5332 crore was released by the Centre during 2019-20. Due to Covid-19 pandemic, the ministry sanctioned partial compensation of Rs 2156 crore during the last financial year (2020-21).
No amount has been released to any state during 2021-22. “The economic impact of the pandemic has led to higher compensation requirements due to lower GST collection and at the same time lower collection of GST compensation cess,” Chaudhary said.
GST compensation of Rs 91,000 crore has been released to all states/UTs to partly meet the compensation payable for the period 2020 to 2021 as the amount in GST compensation fund was not adequate to meet the full compensation requirement, he said.
As per the decision taken by the GST Council, in FY 20-21, the Centre had borrowed Rs 1.1 lakh crore under a special window and passed it on to states as back-to-back loan to help them meet the resource gap due to short-release of compensation on account of inadequate balance in the compensation fund.
Subsequently, the Centre is borrowing Rs 1.59 lakh crores from the market through a special window in current FY and is passing it on to states/ UTs as a back to back loan in appropriate tranches as was done last year, he added.
In addition to this, depending on the amount available in the compensation fund, the Centre has been releasing the regular GST compensation to states to make up for the GST revenue shortfall.
“The states will be paid full GST compensations as per GST (compensation to states) Act, 2017 for the transition period by extending the levy of compensation cess beyond five years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme,” he added.
PNN
