Govt to release another Rs 35K cr compensation to States soon

Govt to release another Rs 35K cr compensation to States soon

The Centre will soon release another Rs 35,000 crore to states to compensate for the revenue loss on account of GST rollout, an official said.

Under the Goods and Services Tax (GST) law, states are guaranteed compensation for revenue loss for 5 years if their revenue does not increase 14 per cent on the base year of 2015-16.

There were no differences between the Centre and States with regard to compensation payment in 2017-18, 2018-19, and in the first four months of the current fiscal.

However, with revenue mop-up from compensation cess falling inadequate, the Centre held back fund transfer to states for revenue shortage beginning August.

Following this, states raised the issue with the Centre and in December 2019, Rs 35,298 crore was released as compensation for August-September.

“We will soon transfer another Rs 35,000 crore from the consolidated fund of India (CFI) to compensation cess fund in 2 instalments. The first tranche will be compensation for October-November,” an official told PTI.

The excess collection from compensation cess in 2017-18 and 2018-19 was deposited in the CFI earlier and this will now be transferred back to the compensation fund, the official added.