Centre clears entire GST compensation dues of states till 31st May 2022

Last updated: 01 June 2022

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The Indian government has settled all Goods and Services Tax (GST) compensation owed to states up to May 31, 2022, by disbursing Rs. 86,912 crores. This payment was made to help states manage their finances and fund essential programmes, particularly capital expenditure. Notably, this release occurred even though the GST Compensation Fund only held approximately Rs. 25,000 crores, with the remainder being advanced by the Centre from its own funds.

The Government of India has released the entire amount of GST compensation payable to States up to 31st May, 2022 by releasing an amount of Rs.86,912 crores. This decision was taken to assist the States in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year. This decision has been taken despite the fact that only about Rs.25,000 crore is available in the GST Compensation Fund. The balance is being

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FAQ :

The Centre has released the entire amount of GST compensation payable to states up to May 31, 2022, amounting to Rs. 86,912 crores.

This decision was taken to assist the states in managing their resources and ensuring that their programmes, especially capital expenditure, are carried out successfully.

No, only about Rs. 25,000 crores was available in the GST Compensation Fund. The balance was released by the Centre from its own resources, pending the collection of Cess.

GST compensation was assured to states for any revenue loss arising from the implementation of GST, as per the GST (Compensation to States) Act, 2017, for a period of five years from July 1, 2017.

In previous years, the Centre borrowed and released funds as back-to-back loans to states to cover shortfalls in cess collection, including Rs. 1.1 lakh crore in 2020-21 and Rs. 1.59 lakh crore in 2021-22.

Maharashtra received the highest GST compensation amount, totalling Rs. 14,145 crores.

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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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