Centre releases Rs 19,950 crore as GST compensation to states and UTs

This is for the first time that the Centre has given compensation to states for one month only

The Centre has released Rs 19,950 crore as goods and services tax (GST) compensation to states and Union Territories for October. 

Generally, the Union government releases compensation for two months and this is the first time it has given compensation for only one month.

Compensation was given on February 17, almost a month ahead of the GST Council meeting, slated for March 14. 

States have been complaining about the delay in release of compensation. 

According to an earlier agreement, compensation for October and November should have been disbursed by December. 

With this release, the Centre has given a total of Rs 1.20 trillion under this head to the states and UTs from April-October of the current fiscal year, said people in the know. 

However, only Rs 78,874 crore was collected as compensation cess as on January 31, 2020. 

The Centre has released Rs 41,624 crore more than it has collected as cess. It was able to do so, given that Rs 47,271 crore remained unutilised after the release of GST compensation to states and UTs in FY18 and FY19. It still leaves a Rs 5,647-crore surplus with the government. 

Finance ministry officials said a total compensation cess of Rs 62,611 crore was collected in FY18, out of which Rs 41,146 crore was released to states and UTs. Further, in the FY19, Rs 95,081 crore was collected as GST compensation cess, of which Rs 69,275 crore was released to states and UTs.

In her Budget speech, Finance Minister Nirmala Sitharaman said the government had decided to transfer the balance from the GST Compensation Fund, due from its collection in FY17 and FY19, in two instalments. 

States that do not see a 14 per cent rise in their GST revenues on the base of FY16 are given compensation.