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New Delhi, Apr 8 (PTI): In a bid to provide further relief to states amid the coronavirus outbreak, the finance ministry is planning to soon release another about INR 34,000 crore to states as compensation for their revenue loss in the goods and services tax (GST) regime.
States, so far, have been paid pending dues till November and the remaining will be cleared in phases soon, sources said.
The finance ministry cleared about INR 34,000 crore pending GST compensation for October and November in two tranches.
The first tranche of INR 19,950 crore was released on February 17, while the remaining amount of INR 14,103 crore was distributed to states and Union territories on Tuesday, sources added.
In all, INR 34,053 crore were released at a time when states are facing liquidity crunch due to the nationwide lockdown imposed to contain spread of coronavirus.
According to sources, the government has released close to INR 1.35 lakh crore to states and union territories towards GST compensation cess.
Under GST law, states were guaranteed to be paid for any loss of revenue in the first five years of the GST implementation, which came into force from July 1, 2017.
The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.
Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.
The Centre has, so far, released about INR 2.45 lakh crore as GST compensation to states since the implementation of GST on July 1, 2017.
During July 2017-March 2018, INR 48,785 crore was released, while between April 2018-March 2019, INR 81,141 crore was paid to states. For April-May and June-July last year, INR 17,789 crore and INR 27,956 crore were released. Further, INR 35,298 crore was paid to states as compensation for August-September and INR 34,053 crore for October-November 2019.
GST collections in March slipped below the psychological INR 1-lakh crore mark for the first time in four months to INR 97,597 crore as the COVID-19 lockdown that shut most businesses compounded tax collections in an already sluggish economy.
GST mop-up in March recorded a 8.4 per cent decline over March 2019 collection of INR 1.06 lakh crore. The collections were lower on account of dip in revenues from domestic transactions as well as imports.
In the past four months -- November 2019-February 2020 -- GST collection surpassed the INR 1-lakh crore mark.
In February, mop-up was INR 1.05 lakh crore, January (INR 1.10 lakh crore), December (INR 1.03 lakh crore) and November (INR 1.03 lakh crore).