The Government on Thursday released an amount of Rs 75,000 crore as compensation to states for Goods and Services Tax (GST).
In a statement issued by the Finance Ministry, it was informed that the amount has been released under the back-to-back loan facility in lieu of GST compensation. This release is in addition to normal GST compensation being released every two months out of actual cess collection, it added further.
“Subsequent to the 43rd GST council meeting held on May 28, 2021, it was decided that the Central Government would borrow Rs 1.59 lakh crore and release it to states with legislature on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the compensation fund,” the statement said.
This amount is as per the principles adopted for a similar facility in 2020-21, where an amount of Rs 1.10 lakh crore was released to states under a similar arrangement, official sources said.
“For effective response and management of pandemic and a step-up in capital expenditure all states have a very important role to play. For assisting the states in their endeavour, the Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during 2021-22 of Rs 75,000 crore (almost 50 per cent of the total shortfall for the entire year) released today in a single installment,” it said.
The balance amount will be released in the second half of 2021-22 in steady instalments.