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 released by the Centre from its own resources pending collection of Cess.

Goods and Services Tax was introduced in the country w.e.f. 1^st July, 2017 and States were assured for compensation for loss of any revenue arising on account of implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for a period of five years. For providing compensation to States, Cess is being levied on certain goods and the amount of Cess collected is being credited to Compensation Fund. Compensation to States is being paid out of the Compensation Fund w.e.f. 1^st July, 2017.

Bi-monthly GST compensation to States for the period 2017-18, 2018-19 was released on time out of the Compensation Fund. As the States’ protected revenue has been growing at 14% compounded growth whereas the Cess collection did not increase in the same proportion, COVID-19 further increased the gap between protected revenue and the actual revenue receipt including reduction in cess collection.

In order to meet the resource gap of the States due to short release of compensation, Centre has borrowed and released Rs.1.1 lakh crore in 2020-21 and Rs.1.59 lakh crore in 2021-22 as back-to-back loan to meet a part of the shortfall in cess collection. All the States have agreed to the above decision. In addition, Centre has also been releasing regular GST compensation from the Fund to meet the shortfall.

With the concerted efforts by Centre and States, gross monthly GST collection including Cess has been showing a remarkable progress. The details of GST compensation payable for the past financial years and for the period of April-May of the current financial year are given as per the table below: -

(i)	Dues for the months of April and May, 2022	Rs.17,973 crores
(ii)	Dues for the months of February and March, 2022	Rs.21,322 crores
(iii)	Balance of compensation payable upto January 2022	Rs.47,617 crores
	Total	Rs.86,912 crores*

*State-wise break-up is given in a separate table. 

With this release of Rs. 86,912 crore, the compensation to States till May 2022 gets fully paid and only compensation for June 2022 would remain.

STATE-WISE BREAK-UP (Amount Rs. In Crore)

S. No.	Name of State/UT	Amount released
(1)	(2)	(3)
1	Andhra Pradesh	3199
2	Assam	232
3	Chhattisgarh	1434
4	Delhi	8012
5	Goa	1291
6	Gujarat	3364
7	Haryana	1325
8	Himachal Pradesh	838
9	Jharkhand	1385
10	Karnataka	8633
11	Kerala	5693
12	Madhya Pradesh	3120
13	Maharashtra	14145
14	Puducherry	576
15	Punjab	5890
16	Rajasthan	963
17	Tamil Nadu	9602
18	Telangana	296
19	Uttar Pradesh	8874
20	Uttarakhand	1449
21	West Bengal	6591
	Total	86912

 

GST compensation fully released to states, Centre funded the shortfall to clear outstanding dues and support state spending. The Centre released the entire GST compensation payable to States up to 31 May 2022 totalling Rs.86,912 crore, partly from the Compensation Fund and partly from central resources pending cess collection. The disbursement covers dues for April-May 2022, February-March 2022 and the balance up to January 2022, with only June 2022 remaining; a state-wise break-up is provided. The transfers implement the compensation guarantee under the GST (Compensation to States) Act, 2017, and follow earlier back-to-back loans to address cess shortfalls.