The central government can pay full compensation of GST to states, 97 thousand crores are going to be released soon

The central government has made it clear on Monday that the states are going to be given the complete amount of GST Compensation. 97,000 crore rupees are going to be released to the states first. After this, the extra amount is going to be released within the coming time. After the reduction within the Goods and Services collection (GST Collection), the states are going to be given the complete amount of GST Compensation. The central government has given information about this on Monday. The govt has said that out of the entire outstanding amount, 97,000 crore rupees are going to be released immediately. Aside from this, payment of the additional amount is going to be released in the future. A final judgment is going to be taken during this regard within the GST Council. This explanation from the Central Government came at a time when, after the last meeting of the GST Council, some states raised questions about GST compensation.

In a media report quoting a senior government official, it’s been said that the whole amount of GST compensation is going to be given to the states. Recently, the minister of finance Nirmala Sitharaman said that as long as there’s a rule to compensate the states under the GST Act 2017, we’ve to follow it.

The central government cannot borrow from the states The fund
The officer has told that the central government has held a gathering with the finance secretaries in the states last week. Within the information given to Mint, he told that the govt had given the choice of borrowing to the states to fund the payout. If the central government borrows, then it’ll increase the yield, which can affect both the middle and therefore the state. At a time when the govt wants to revive the economy with the assistance of foreign companies to take a position in India, the middle cannot take such a step.

Talks with an RBI on opening a special window
To make the method of borrowing easier for the states, the govt has lectured the RBI in order that a special window is often opened. Under this window, states can borrow at an equivalent rate. Afterward, this loan is going to be linked to the cess collection and its repair is going to be done through the cess collection only. This may not increase any pressure on the budget of the states.

non-BJP state governments didn’t hear the Council
This clarification came from the central government after the last meeting of the GST Council. During this meeting, non-BJP states disagreed on the paths suggested by the govt and refused to simply accept it. These states included the governments of Delhi, Punjab, Kerala, Telangana, and West Bengal.

2.35 lakh crore decrease
It is worth mentioning that since August 2019, the compensation payment issue has remained since the GST collection was reduced. Within the current fiscal year, the compensation of the states is estimated to need three lakh crores. Out of this, 65 thousand crore rupees are often done from the revenue received. Even after this, 2.35 lakh crores are going to be reduced. The middle estimates that during this shortfall of Rs 2.35 lakh crore, thanks to the implementation of the GST, there has been a loss of only Rs 97 thousand crores. The remaining deficiency is thanks to the coronavirus epidemic.