GST Compensation of Rs 19,950 Crore released to States, UTs by Modi Govt.

The central government has released Rs 19,950 crore to the states as GST compensation, making the total amount released to them to over Rs 1.2 lakh crore. The finance ministry said in a statement on last Monday that Rs 19,950 crore was released to states and union territories.

When the Goods and Services Tax (GST) came into force in July 2017, states which have lost powers to levy taxes, such as VAT, have been promised to be compensated for any revenue loss in the first five years of GST implementation.

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This compensation was to come out of a pool to be generated from the ‘Cess’ levy over and above the GST rate on certain sin and luxury goods. The shortfall is computed assuming an annual growth of 14 percent in GST collections by states over the 2015-16 base year.

“With this release of GST compensation, the central government has released a total of Rs 1,20,498 crore towards GST compensation to the states/UTs during current fiscal,” the statement said.

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The money released compares to only Rs 78,874 crore received in the current FY (until January 31, 2020) as compensation cess.

Officials of the Finance Ministry said total GST compensation cess of Rs 62,611 crore was collected in the FY 2017-18, out of which Rs 41,146 crore was released to the states / UTs as GST compensation.

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Rs 95,081 crore was collected as GST compensation cess in FY 2018-19, of which Rs 69,275 crore was released as GST compensation to the states / UTs. Officials said that an amount of Rs 47,271 crore compensation cess collected as on March 31, 2019 had remained unutilised after the release of GST compensation to the states / UTs in 2017-18 and 2018-19.

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