Centre releases Rs 17,000 crore GST compensation to States, UTs; highest amount released for Maharashtra, Karnataka

The Central Government has released an amount of Rs 17,000 crore to States/UTs on November 25 towards the balance GST compensation for the period April to June 2022. The total amount of compensation released to the States, and UTs so far, including the aforesaid amount, during the year 2022-23 is now Rs 1,15,662 crore.

This is despite the fact that the total cess collection till October 2022 is only Rs 72,147 crore and the balance of Rs 43,515 crore is being released by the Centre from its own resources.

In the pre-budget meeting held today by the Union Finance Ministry with the respective finance ministers of the states and UTs, the states placed the demand for increasing financial assistance in central schemes and sharing of cess income with the states. A cess is a form of tax levied by the government for the development of a particular service or sector. It's charged over and above direct and indirect taxes.

With this release, the Centre has released, in advance, the entire amount of cess estimated to be collected this year till March-end available for payment of compensation to states.

“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,” stated the release.  

Even in May this year, the Central Government had released Rs 86,912 crore as provisional GST compensation to states for the period Feb-May’2022 despite the fact that there was only about Rs 25,000 crores in the GST Compensation Fund, by making arrangement of funds of around Rs 62,000 crore from its own resources.

Maharashtra and Karnataka received the highest amount for GST compensation as both the states together have received more than 23 per cent of the total compensation amount received. Maharashtra received the maximum amount of compensation with Rs 2081 crore being released for the states, followed by Karnataka.