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Centre releases Rs 2,104 crore to states for GST compensation shortfall

With this, the Centre has released Rs 1.06 lakh crore to states in GST compensation since October.

twitter-logoBusinessToday.In | March 9, 2021 | Updated 16:46 IST
Centre releases Rs 2,104 crore to states for GST compensation shortfall
The amount released as part of 19th weekly installment was borrowed at an interest rate of 5.8594 per cent.

The Centre on Tuesday said it has released the 19th weekly installment of Rs 2,104 crore to states to compensate for shortfall in revenue on account of implementation of the Goods and Services Tax (GST).

While Rs 2,103.95 crore was released to seven states, the remaining amount was released to the union territory of Puducherry. With this, the Centre has released Rs 1.06 lakh crore to states in GST compensation since October, the Finance Ministry said in a release.

"Till now, 96 per cent of the total estimated GST compensation shortfall has been released to the states and union territories with legislative assembly," it said. While Rs 97,242.03 crore has been released to states, an amount of Rs 8,861.97 crore has been released to three union territories with legislative assembly.

Also read: GST e-invoice made mandatory for businesses with revenue over Rs 50 cr

The Finance Ministry took to Twitter to share the news of release of latest installment.

The government had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST.

"Under the special window, the Government of India has been borrowing in government stock with tenure of 3 years and 5 years. The borrowing made under each tenure is equally divided among all the states as per their GST compensation shortfall," the release said.

With the release of the latest installment, the proportionate pending GST shortfall with respect to borrowing under five years tenor has been concluded for 23 states and three union territories with legislature. Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim don't have any shortfall in revenue due to GST implementation.

The amount released as part of 19th weekly installment was borrowed at an interest rate of 5.8594 per cent. "So far, an amount of Rs 1,06,104 crore has been borrowed by the central government through the special borrowing window at a weighted average interest rate of 4.8842 per cent."

Besides, the Centre had also granted states additional borrowing permission for Rs 1,06,830 crore, or 0.50 per cent of their Gross State Domestic Product (GSDP), to raise additional resources.

Also read: FY21 GST revenue inches close to FY20 collection despite Covid disruptions

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