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Tax on Go

GST Compensation: Centre releases final instalment of Rs 4,104 crore

By TOG News Service
Mar 16, 2021 , New Delhi

TOG NEWS SERVICE, NEW DELHI, MAR 16, 2021: THE Ministry of Finance said it has released the final weekly instalment of Rs. 4,104 crore to the States to compensate for the shortfall in revenue on account of the implementation of the Goods and Services Tax (GST).

While an amount of Rs. 4,086.97 crore has been released to 23 States, the remaining Rs.17.03 crore has been released to the Union Territories (UTs) of Delhi, Puducherry, and Jammu and Kashmir.

"With the current release, 100 per cent of the total estimated GST compensation shortfall of Rs. 1.10 lakh crore for the year 2020-21 has now been released to the States and UTs," said the ministry. Of this, Rs. 1,01,329 crore has been released to the States and Rs. 8,879 crore to the UTs.

The government had set up a special borrowing window in October, 2020 to meet the estimated shortfall of Rs. 1.10 lakh crore in revenue from GST implementation. The borrowings were done in 20 weekly instalments in government stock with tenure of three years and five years.

"The borrowings made under each tenure are equally divided among all the States as per their GST compensation shortfall. With the current release, the proportionate pending GST shortfall with respect to borrowing under both five years tenure and three year tenure has been concluded for 23 States and three UTs," said the ministry.

Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim did not have any shortfall in revenue due to GST implementation.

The amount released as part of the 20th instalment has been borrowed at an interest rate of 4.9288 per cent.

"The total amount of Rs. 1,10,208 crore has been borrowed by the Central government through the special borrowing window at an weighted average interest rate of 4.8473 per cent," the ministry noted.

Besides, the Centre had also granted States additional borrowing permission for Rs. 1,06,830 crore, or 0.50 per cent of their Gross State Domestic Product (GSDP), to raise additional resources.