The finance ministry issued the notification that released the 17th weekly instalment of Rs 5,000 crore to 23 states including Jammu and Kashmir. The total amount issued as the portion of the special borrowing window set up in October 2020 to Rs 1 lakh crore. In this article, we will discuss the GST compensation shortfall released to states.
GST compensation shortfall released
The Central government has issued Rs 1 lakh crore to states and Union Territories (UTs) in four months since October 2020 to coincide with the GST (Goods and Services Tax) compensation deficit, the Finance Minister stated.
The ministry stated on February 19, that the 17th weekly instalment of Rs 5,000 crore to 23 states and three UTs (Delhi, Jammu & Kashmir and Puducherry). This took the cumulative amount released so far as part of the special borrowing window set up in October 2020 to Rs 1 lakh crore.
The other five states, Arunachal Pradesh, Mizoram, Manipur, Sikkim and Nagaland, do not have a notch in revenue on account of GST implementation.
Further Clarification by GST Council
The Ministry of Finance further stated, “Till now, 91% of the inclusive estimated GST compensation shortfall has been issued to the States & UTs with Legislative Assembly.
Also, the central government had set up a special borrowing window in October 2020 to meet the determined shortfall of 1.10 lakh crore in revenue arising on account of the implementation of GST.
The financings are being made through this window by the Centre on behalf of states and UTs.
Under this particular window, the Centre has been acquiring in government stock with a tenor of 3 years and 5 years. The borrowing made under various tenor is equitably distributed with all states as per their GST compensation shortfall.
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