New Delhi: The government announced on Thursday that it has released Rs 75,000 crore to states and union territories to compensate them for the GST revenue shortfall.
The GST Council decided on May 28 that the central government would borrow Rs 1.59 lakh crore and release it to the states and UTs with the legislature back-to-back to meet the resource gap caused by the short release of compensation due to insufficient funds in the compensation fund.
“The Ministry of Finance has released Rs 75,000 crore to states and union territories with legislatures under the back-to-back loan facility in lieu of GST compensation today. This is in addition to the regular GST compensation released every two months from actual cess collection “According to a statement issued by the ministry.
It also stated that all eligible states and UTs (in collaboration with the legislature) have agreed to the arrangements for funding the compensation shortfall through the back-to-back loan facility.
“To assist the States/UTs in their endeavour, the Ministry of Finance has front-loaded the release of assistance under the back-to-back loan facility during FY 2021-22 Rs 75,000 crore (almost 50% of the total shortfall for the entire year).”
The remaining funds will be released in regular instalments during the second half of 2021-22.