The total amount of compensation released to states and Union Territories so far this financial year is Rs 1.16 lakh crore
The Finance Ministry building is situated in North Block, New Delhi
The central government has released Rs 17,000 crore to states as Goods and Services Tax (GST) compensation for April-June, the finance ministry said on November 25.
The funds were released on November 24, a day before Union Finance Minister Nirmala Sitharaman met her state counterparts in the Capital to take their inputs and suggestions for the upcoming budget for 2023-24, expected to be presented on February 1.
With the latest release of the GST compensation, the total amount given to states and Union Territories so far this financial year is Rs 1.16 lakh crore.
“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,” the finance ministry said in a statement.
“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 compensation to States. 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,” the statement added.
With the protected GST revenue period of five years ending on June 30, states are now not entitled to compensation for any GST revenues shortfall.
As per the law, states were guaranteed to receive 14 per cent growth in their GST revenues every year for the first five years of the indirect tax regime, with any shortfall to be made up from the compensation cess fund.
In October, India collected Rs 1.52 lakh crore as GST – the second-highest ever. However, as many as 17 states and Union Territories saw their revenue either decline on a year-on-year basis or post growth of under 14 per cent.