Government releases ₹40,000-crore GST dues to States

Amount to help meet shortfall in compensation cess

Through back-to-back borrowings from the market, the Centre issued 40,000 crore to States and Union Territories on Thursday to help overcome the gap in GST compensation cess revenues.

The Finance Ministry stated this was part of a 1.59 lakh crore gap in the Compensation Fund for States that will be covered by market borrowings, but that the overall GST compensation to be paid in 2021-22 could be more than the States’ actual dues for the year.

In July, a total of 75,000 crore was transferred to states, leaving 44,000 crore to be borrowed and dispersed during the remainder of 2021-22.

The remaining funds will be released as soon as possible, according to the Ministry.

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Over and above

“This is in addition to usual GST compensation being distributed every two months out of actual cess collection,” the Ministry said, adding that more than Rs 1 lakh crore was expected to be released to States based on GST cess collections throughout the financial year.

Write-off possibility

“The entire amount of 2.59 lakh crore is projected to exceed the amount of GST compensation accruing in FY 2021-22,” it added, implying that some of the outstanding dues dating back to 2020-21 would be written off to that extent.

The Ministry stated, “It is believed that this publication will assist States/UTs in planning their public expenditure, among other things, for enhancing health infrastructure and undertaking infrastructure projects.”