Centre releases seventh tranche of GST compensation payment

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By Ashish Mitra --
Tuesday, 15 Dec, 2020

As part of the compensation to states, the Centre has released the seventh tranche of Rs 6,000 crore as goods and services tax (GST). The amount was borrowed at an interest rate of 5.13 per cent and disbursed to the states as back-to-back loans, it is gathered.

Of this amount, Rs 5,516.6 crore was allocated to 23 states while the remaining was given to the three Union Territories viz Delhi, Jammu & Kashmir and Puducherry which are members of the GST Council. The remaining five states namely Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in the revenue on account of GST implementation.

“So far, an amount of Rs 42,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.77%,” the government said.

The central government has to disburse Rs 1.1 lakh crore this fiscal which is estimated to be a GST shortfall from the amount guaranteed to them under the law. Though the total shortfall is likely to be Rs 1.8 lakh crore in the current fiscal, the central government has agreed to reimburse only the gap arising out of GST implementation issue through market borrowing under a special window.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the central government has also granted additional borrowing permission equivalent to 0.5 per cent of Gross States Domestic Product (GSDP) to the states choosing option-1 to meet GST compensation shortfall.

“All the States have been given their preference for Option-I. Permission for borrowing the entire additional amount of 1,06,830 crore (0.5 per cent of GSDP) has been granted to 28 states under this provision,” it said.

Centre releases seventh tranche of GST compensation payment. As part of the compensation to states, the Centre has released the seventh tranche of Rs 6,000 crore as goods and services tax (GST). The amount was borrowed at an interest rate of 5.13 per cent and disbursed to the states as back-to-back loans, it is gathered.

Of this amount, Rs 5,516.6 crore was allocated to 23 states while the remaining was given to the three Union Territories viz Delhi, Jammu & Kashmir and Puducherry which are members of the GST Council. The remaining five states namely Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in the revenue on account of GST implementation.

“So far, an amount of Rs 42,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.77%,” the government said.

The central government has to disburse Rs 1.1 lakh crore this fiscal which is estimated to be a GST shortfall from the amount guaranteed to them under the law. Though the total shortfall is likely to be Rs 1.8 lakh crore in the current fiscal, the central government has agreed to reimburse only the gap arising out of GST implementation issue through market borrowing under a special window.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the central government has also granted additional borrowing permission equivalent to 0.5 per cent of Gross States Domestic Product (GSDP) to the states choosing option-1 to meet GST compensation shortfall.

“All the States have been given their preference for Option-I. Permission for borrowing the entire additional amount of 1,06,830 crore (0.5 per cent of GSDP) has been granted to 28 states under this provision,” it said.