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Rs 163 cr GST compensation released to state for 2021-22, Rs 111 cr pending

State has received Rs 633 crore ever since the GST compensation regime was rolled out in 2027


The Centre has released an amount of Rs 163 crore to Meghalaya as Goods and Services Tax (GST) compensation for the financial year 2021-22 even as it has not given any assurance on the extension of the GST compensation regime beyond June 2022.

An amount of Rs 111 crore is yet to be released to the state as GST compensation in the 2021-22 fiscal.

As per the latest statistics from the Union Finance Ministry in possession of The Meghalayanthe state has received an amount of Rs 633 crore ever since the GST compensation regime started.

Meghalaya has received third highest compensation after Assam (Rs 4615 crore) and Tripura (Rs 833 crore) in the last five years.

Assam is yet to receive an amount of Rs 549 crore as GST compensation from the Centre in the current fiscal.

Interestingly, when the GST regime was introduced in July 2017, the states were guaranteed to be compensated, during the transition period of five years, if they failed to register a 14 per cent growth in GST revenue collection over the base year of 2014-15.

Since its launch in 2017, most of the states relied on the compensation to achieve the GST revenue growth of 14 per cent. However, the revenue gap only increased over the years. In 2018-19, states collectively could achieve 88 per cent of the targeted growth on their own, leaving a shortfall of only 12 per cent to be compensated by the Centre. Yet, the gap increased to 23 per cent in 2019-20, and to 36 per cent in 2020-21.

A similar shortfall has been witnessed even in the 2021-22 fiscal, as is evident from the details of the GST compensation furnished by Union Finance Minister Nirmala Sitharaman in Parliament on Monday.  A shortfall of Rs 40,412 crore has been registered from the previous fiscal of 2020-21.

As the GST compensation regime expires in June this year, many state governments have appealed to the Centre to extend the compensation period for another five years upto June 2027.

“Many states have requested for extension of the compensation period during the deliberations in the GST Council and in letters addressed to the central government. In this regard, it is stated that as per Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016, Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years from the date of implementation of GST,” Sitharaman said recently in the Parliament.

Talking to this correspondent, a senior official in the finance ministry said that several state governments have expressed their inability to collect GST during the Covid-19 pandemic.

“Many State governments have appealed to the Centre to extend the GST compensation period upto 2027,” the official said.

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