Centre Releases Rs 17,000 Cr to States, UTs as GST Compensation

The central government has released an amount worth Rs 17,000 crore to states and Union territories towards the balance GST compensation for the period April to June 2022.

The total amount of compensation released to the States/UTs so far, including thus Rs 17,000 crore, during the year 2022-23 is Rs 1,15,662 crore, the Ministry of Finance said in a statement on Friday.

"This is despite the fact that total Cess collection till October, 2022 is only Rs.72,147 crore and the balance of Rs. 43,515 crore is being released by the Centre from its own resources. With this release, the Centre has released, in advance, the entire amount of Cess estimated to be collected this year till March-end available for payment of compensation to States," the statement added.

This decision was taken to assist the States in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year.

"Even in May this year, the Central Government had released Rs. 86,912 crore as provisional GST compensation to States for the period Feb-May'2022 despite the fact that there was only about Rs. 25,000 crore in the GST Compensation Fund, by making arrangement of funds of around Rs. 62,000 crore from its own resources," the statement said.

Goods and Services Tax was introduced in the country with effect from July 1, 2017 and states were assured for compensation for loss of any revenue arising on account of implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for a period of five years.

For providing compensation to States, Cess is being levied on certain goods and the amount of Cess collected is being credited to Compensation Fund. Compensation to States is being paid out of the Compensation Fund with effect from July 1, 2017.

(with inputs from ANI)

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