Rs 86,912 crores - Centre clears entire GST compensation due till date i.e. 31st May, 2022

Ministry of Finance has informed that the Centre has cleared the entire GST compensation due till date i.e. 31st May, 2022). 

A statement by Ministry of Finance on PIB said, "The Government of India has released the entire amount of GST compensation payable to States up to 31st May, 2022 by releasing an amount of Rs.86,912 crores. This decision was taken to assist the States in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year."

The statement by Ministry of Finance adds, "This decision has been taken despite the fact that only about Rs.25,000 crore is available in the GST Compensation Fund. The balance is being released by the Centre from its own resources pending collection of Cess."

Goods and Services Tax (GST)

-Goods and Services Tax was introduced in the country w.e.f. 1st July, 2017 and States were assured for compensation for loss of any revenue arising on account of implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for a period of five years. 

-For providing compensation to States, Cess is being levied on certain goods and the amount of Cess collected is being credited to Compensation Fund. 

- Compensation to States is being paid out of the Compensation Fund w.e.f. 1st July, 2017.

With this release of Rs. 86,912 crore, the compensation to States till May 2022 gets fully paid and only compensation for June 2022 would remain, says Ministry of Finance.