Centre releases Rs 30,000 crore as GST compensation for FY21


The central government has released Rs 30,000 crore as goods and service tax (GST) compensation to states for FY21, the finance ministry said Tuesday.

Finance Minister Nirmala Sitharaman had said last week in Rajya Sabha during her reply in Budget session that states will get Rs 30,000 crore as GST compensation within March, while GST compensation due to states prior to Covid pandemic was already paid.

With the amount released on March 27, the total compensation released for FY 21 comes to Rs 70,000 crore. The Centre has also released an additional Rs 14,000 crore as adhoc settlement of integrated GST. This was released on March 30.

“Taking into account the release of GST compensation, back to back loan and adhoc IGST settlement, a balance of Rs 63,000 crore GST compensation is pending to states/UTs for FY 2020-21,” the finance ministry said.

The amounts are in addition to Rs 1.10 lakh crore that the Centre released to states as back-to-back loans to make up for GST compensation shortfall in collection of GST. This was done after the decision of the GST Council in October last year and the full amount was issued by mid of the month.

According to estimates of ratings agency

, the GST compensation requirement of state governments for FY2022 would be at Rs 2.7-3.0 lakh crore, and the shortfall relative to the assessed cess collections at Rs 1.6-2.0 lakh crore.

GST collections have been clocking above Rs 1 lakh crore consistently since October 2020 on the back of economic recovery and impact of various measures taken by tax administration to improve compliance. Revenue collection crossed Rs 1.1 lakh crore-mark in March, for the third time in a row.

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