Question : GST Compensation

(a) whether it is a fact that the Government has failed to pay the promised compensation at a guaranteed rate of revenue of 14 per cent to States for losses associated with GST implementation risks;

(b) if so, the amount due to be paid by the Government to various State Governments;

(c) whether it is a fact that most of the State Governments have not agreed for the Centre’s proposal to borrow to adjust the amount due; and

(d) if so, the details thereof along with the reaction of the Government thereto?

MINISTER OF STATE IN MINISTRY OF FINANCE
(Shri Anurag Singh Thakur)
(a):- As per provisions in Goods and Service Tax (Compensation) Act, 2017 states are assured of their revenue at 14% compounded growth rate over the base year revenue 2015-16 for loss of revenue arising on account of GST implementation for a period of five years. As per Section 7 of the GST (Compensation to States) Act, 2017, the States are required to be compensated for loss of revenue due to implementation of GST from the proceeds of the GST compensation Cess being levied on certain luxury items and demerit goods under Section 8 of the said Act. As per provisions in section 10 (1) of GST (Compensation to state) Act, 2017, GST Compensation cess has been credited into a non-lapsable Fund known as GST Compensation Fund in Public Account of India. Section 10(2) of the said Act, 2017 provides that payment of GST compensation shall be made out of compensation fund. Accordingly, GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states. Due to the inadequate balance in the Compensation Fund, the admissible bi-monthly GST compensation for the period April-July, 2020 could not be released so far.

(b):- Details of pending GST compensation to states is as per Annexure.

(c) & (d):- Some states have objected to the proposed two borrowing options. Central Government continues to remain engaged with the States who have not given either of the options.