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The Centre, on Monday, released ₹30,000 crore to States and Union Territories (UTs) as compensation towards GST shortfall for the FY22.
With this, the total amount of compensation released so far for the current fiscal is ₹70,000 crore, while approximately ₹63,000 crore more is to be paid. This is apart from the back-to-back loan of nearly ₹1.10-lakh crore released in lieu of shortfall in GST compensation
On Tuesday, the Centre also released ₹28,000 crore by way of adhoc settlement of IGST (Integrated Goods & Services Tax). Of this, States got ₹14,000 crore, while the remaining went to the Central account.
The Goods and Services Tax (Compensation to States) Act 2017 mandates payment of full revenue compensation for the first five years from the date of introduction of GST. It is paid bi-monthly; the last instalment for a financial year is given the following year.
For calculating the compensation amount, the projected nominal growth rate of revenue subsumed for a State during the transition period has been fixed at 14 per cent per annum. For calculation, 2015-16 has been taken as the base year. Cess is levied on various goods and services falling in the category of 28 per cent slab to pay for the compensation.
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