Free Press Journal

States to get Rs 90 bln as GST compensation

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The compensation to states will be calculated on the basis of 14% growth in tax revenues of states. The govt collected 71.98 bln rupees in July and 78.23 bln rupees in August as compensation cess.

New Delhi : The Centre is likely to release close to 90 bln rupees to states as compensation for revenue loss in July and August following the implementation of the goods and services tax, a government official said. Of the 150 bln rupees collected as compensation cess, the Centre is likely to give around 85-90 bln rupees to states for the first two months,  the official told Cogencis. The cess is meant to compensate states in the first five years of the new indirect tax regime for potential revenue losses from the transition to GST.

The compensation to states will be calculated on the basis of 14% growth in tax revenues of states. The government collected 71.98 bln rupees in July and 78.23 bln rupees in August as compensation cess. The total GST collections were 940.63 bln rupees in July and 906.7 bln rupees in August. The compensation requirement for states may increase from September as the states got pending value-added tax in the initial two months, the official said. States have been complaining of revenue losses under GST as the amount from Integrated GST is yet to be released.


 The Centre will pay compensation to states after every two months based on the difference between the projected revenue and the actual amount.