Guwahati: The Government of India has issued the whole amount of GST compensation owed to states until May 31, 2022, totaling Rs. 86,912 crores.

This decision was made to aid states in managing their resources and ensuring that their programmes, particularly capital spending, are effectively carried out within the fiscal year. This decision was made despite the fact that the GST Compensation Fund only has roughly Rs.25,000 crore available. The Centre is releasing the remaining from its own funds pending Cess collection.

The Goods and Services Tax (GST) was implemented in the nation on July 1, 2017, and states were promised of compensation for any revenue loss resulting from GST implementation under the terms of the GST (Compensation to States) Act, 2017 for a period of five years. Cess is charged on specific products to provide compensation to states, and the money collected is deposited to the Compensation Fund. Compensation to states is being paid from the Compensation Fund as of July 1st, 2017.

The Compensation Fund delivered bi-monthly GST compensation to states for the fiscal years 2017-18 and 2018-19 on schedule. Because the states' protected revenue has been rising at a compounded rate of 14 percent while Cess collection has not grown in the same proportion, COVID-19 has expanded the gap between protected revenue and real revenue receipt, including a reduction in cess collection.

The Centre has borrowed and disbursed Rs.1.1 lakh crore in 2020-21 and Rs.1.59 lakh crore in 2021-22 as back-to-back loans to fund a portion of the cess collection shortfall. The aforesaid decision has been approved by all states. In addition, the Centre has begun issuing regular GST compensation from the Fund to cover the gap.