21.12.2022: States still owed Rs 17,176 crore as GST compensation

GST compensation worth Rs 17,176 crore to states is still pending, the Centre has informed the Parliament.

In a written response to a question in the Rajya Sabha on December 20, Minister of State for Finance Pankaj Chaudhary said the pending amount is for June 2022.

The pending compensation amount is provisional and may change.
“Central Government is committed for payment of GST compensation to States/UTs for five years as per Constitutional provisions,” Chaudhary said in his response.

The five-year protected revenue period for states ended on June 30. As per the law, until then, states were guaranteed a 14 percent annual growth in their GST revenues, with any shortfall to be made up from the compensation cess fund.

Ahead and at the GST Council's 47th meeting in Chandigarh in late June, states had asked for a continuation in the compensation for at least a couple of years on account of the hit their revenues had taken from the coronavirus pandemic. However, the Centre had been steadfast in its stand that it would provide compensation until June and not beyond it. According to the central government, an improvement in GST collections will remove any need for compensating states.

The latest monthly GST mop-up data, released on December 1, showed total collections amounted to Rs 1.46 lakh crore in November – the ninth month in a row they had exceeded the Rs 1.40 lakh crore mark.

However, all but eight states and Union Territories (UTs) witnessed sub-14 percent growth in their revenues in November, as per the data.

Source: Money Control

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