The Centre has released another tranche of Goods and Services Tax (GST) compensation amounting ₹19,950 crore to States.

With this release, the Centre has released over ₹1.20-lakh crore towards GST compensation to the States/UTs during 2019-20. This is despite total collection of only ₹78,874 crore till January 31, during current fiscal.

Post introduction of the Goods and Services Tax (GST), the Centre assured the States, through legislation, that the revenue shortfall will be compensated fully for first five years. For the purpose of calculating the compensation amount in any financial year, 2015-16 was assumed to be the base year. The growth rate of revenue for a State during the five-year period is assumed at 14 per cent per annum.

The Government collected ₹62,611 crore during 2017-18, out of which ₹41,146 crore was released to the States/UTs in the FY 2017-18 as GST compensation. Further, in the FY 2018-19, ₹95,081 crore were collected as GST compensation cess of which ₹69,275 crore was released to the States/UTs in the FY 2018-19. As on March 31, 2019, ₹47,271 crore compensation cess collected had remained unutilised after the release of GST compensation to the States/UTs in the FYs 2017-18 and 2018-19.

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