Centre releases up to Rs 1,00,000 crore of GST compensation shortfall to States so far

The Centre has released Rs 1,00,000 crore to States and Union Territories (UTs) in four months since October 2020 to meet Goods and Services Tax (GST) compensation shortfall, the Union Finance Ministry has said. On Friday, the ministry released the 17th weekly instalment of Rs 5,000 crore to 23 States and three UTs (Delhi, Jammu and Kashmir and Puducherry), taking the total amount released so far under the special borrowing window to Rs 1,00,000 crore.

The remaining five States – Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim – do not have a gap in revenue on account of GST implementation. The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1,10,000 crore in revenue arising on account of implementation of GST.

The borrowings are being done through this window by the Centre on behalf of States and UTs. Under the special window, the Centre has been borrowing in government stock with tenures of three years and five years. The borrowing made under each tenure is equally divided among all States according to their GST compensation shortfall.

With the current release, the proportionate, pending GST shortfall with respect to borrowing under five years’ tenure has been concluded for 16 States and two UTs. Till now, 91 per cent of the total estimated GST compensation shortfall has been released to States and UTs with Legislative Assembly (Delhi, Jammu and Kashmir and Puducherry), the ministry has said.

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