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Over Rs 2.06 trillion GST compensation to states due for April-November

Over Rs 2.06 trillion GST compensation to states due for April-November

The Centre has released Rs 84,000 crore till date to states under the special borrowing window to meet GST shortfall, while the provisional GST compensation due for April-November 2020 stands at over Rs 2.06 lakh crore, Parliament was informed on Monday.

Minister of State for Finance Anurag Singh Thakur, in a written reply in the Lok Sabha, said GST compensation of Rs 40,000 crore has been released to all states/Union Territories to meet partly the bi-monthly compensation for period April-May 2020 as the GST Compensation Fund was not adequate to meet the full compensation for the period.

The balance GST compensation for the period April-May 2020 and for the full period June-November’20 is pending to all states/UTs due to inadequate amount in the GST Compensation Fund during the current fiscal.

“In order to meet the shortfall in GST Compensation to be paid to States, under the special window, Rs 1.1 lakh crore will be borrowed by Government of India in appropriate tranches.

“The amount so borrowed will be passed on the States as loan on back-to-back basis to help the States to meet the resource gap due to non-release of compensation due to inadequate balance in the Compensation Fund… Central Government has released 14 installments of Rs. 6000 crore each to the States,” Thakur said.

A total of Rs 84,000 crore has been released to the states under the special borrowing window.

The provisional GST compensation due for fiscal 2020-21 (April-November) stands at Rs 2,06,461 crore.

The GST compensation released from July 2017 till date to all states together stands at Rs 3.37 lakh crore.

In response to a separate question on whether the government has received complaints against persons and companies regarding issuance of fake invoices to get benefit of Input Tax Credit (ITC), Thakur said 3,852 fake invoice cases have been booked during July 2017 to December 2020.

The quantum of ITC availed by fake invoicing cumulatively stood at Rs 35,620 crore, while 404 arrests have been made in this regard.

Source: Business-Standard. 


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Centre releases 14th installment of Rs 6,000 crore to states to meet GST compensation shortfall

Centre releases 14th installment of Rs 6,000 crore to states to meet GST compensation shortfall

The Centre has released the 14th instalment of Rs 6,000 crore to states as a back-to-back loan to meet the compensation shortfall in collection of goods and services tax, taking the total amount released so far through the special borrowing window to Rs 84,000 crore, the finance ministry said on Monday.

“Till now, 76% of the estimated GST compensation shortfall has been released to the states & UT with legislative assembly,” the ministry said.

Of this amount, Rs 76,616.16 crore has been released to the States and an amount of Rs 7,383.84 crore has been released to the 3 UTs with Legislative Assembly.. Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The amount was borrowed this week at an interest rate of 4.6144%, while the average interest rate was 4.7395%.

An additional borrowing permission of Rs 1,06,830 crore has been granted to the states, it added, equivalent to 0.5% of their gross domestic product.

All states have now taken the Rs 1.1 lakh crore option, where the Centre will borrow the amount and transfer it to the states as loans.

The Centre had offered the state two borrowing options – Rs 97,000 crore and Rs 2.35 lakh crore – with different sets of conditions for each to meet the GST compensation shortfall. The Centre sweetened the first option by increasing the borrowing to Rs 1.1 lakh crore.

Some states initially declined to take any of the options but later chose the first option. The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall arising on account of implementation of GST.

Source: Economic-Times

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Govt releases Rs 6000-cr 13th installment to states for GST shortfall compensation

Govt releases Rs 6000-cr 13th installment to states for GST shortfall compensation

The Ministry of Finance released the 13th weekly instalment of Rs. 6,000 crore to the states on Monday, January 25, to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore was released to 23 states and an amount of Rs 483.40 crore was released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

Till now, 70 percent of the total estimated GST compensation shortfall has been released to the states and UTs with Legislative Assembly. Out of this, an amount of Rs 71,099.56 crore has been released to the states and Rs 6,900.44 crore has been released to the 3 UTs with Legislative Assembly.
The Central government had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs. 1.10 lakh crore in revenue arising on account of implementation of GST.

The borrowings are being done through this window by the Central government on behalf of the states and UTs. So far 13 rounds of borrowings have been completed so far starting from October 23, 2020.

The amount released this week was the 13th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.30%. So far, an amount of Rs 78,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.7491%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.

All the states have given their preference for Option-I. Permission for borrowing the entire additional amount of Rs. 1,06,830 crore (0.50 % of GSDP) has been granted to 28 states under this provision.

Source: ETNowNews

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FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

The Finance Ministry on Monday released the 12th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of Goods and Services Tax (GST).

The ministry in a statement said it has released the 12th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), who are members of the GST Council.

The amount has been borrowed this week at an interest rate of 4.43 per cent.

“Till now, 65 per cent of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs 65,582.96 crore has been released to the States and an amount of Rs 6,417.04 crore has been released to the 3 UTs with Legislative Assembly,” the ministry said.

Thus, the total amount released so far in 12 instalments is Rs 72,000 crore at an average interest rate of 4.70 per cent.

The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim — do not have a gap in revenue on account of GST implementation, the statement said.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.

Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement said.

Source: Financial-Express.

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Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

The central government released the seventh weekly installment of Rs 6,000 crore under the first option of the goods and services tax (GST) compensation on Monday, taking the total amount provided to the states to Rs 42,000 crore.

From the latest tranche, 23 states would get Rs 5,517 crore and the three Union Territories of Delhi, Jammu and Kashmir and Puducherry will receive Rs 483 crore, a finance ministry statement said.

The five states of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, it added.

In October, after an arduous back-and-forth between the Centre and states on the issue, the government started releasing GST compensation tranches to the states through a special borrowing window.

The latest borrowing was done at a rate of 5.13%, taking the average interest rate at which borrowings were made under the window to 4.77%, the ministry said.

Karnataka received the highest amount under this window so far at Rs 5,668 crore, being among the early adopters of the option given by the Centre. This was followed by Rs 5,472 crore to Maharashtra and Gujarat’s Rs 4,213 crore.

Earlier in December, Jharkhand became the last state to select option one for GST compensation provided by the Centre of Rs 1.1 lakh crore. The state received Rs 184 crore in today’s tranche.

Source: Economic-Times

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GST compensation shortfall: Centre disburses another Rs 6,000 crore to states

GST compensation shortfall: Centre disburses another Rs 6,000 crore to states

The central government has released the sixth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall, the government said on Wednesday. This amount has been borrowed at the interest rate of 4.2%.

The government has so far disbursed Rs 36,000 crore to states in back-to-back loan arrangement after borrowing the amount on behalf of states. The average interest rate for the borrowing under special window so far stood at 4.71%, the government said.

“Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the 3 union territories with legislative assembly (Delhi, Jammu & Kashmir and Puducherry) which are members of the GST Council,” the government said.

The government has calculated the GST compensation shortfall on account of implementation to be Rs 1.1 lakh crore this fiscal, an amount that would be paid to states by the end of FY 21 though borrowing as the designated cess fund is inadequate.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government has also granted additional borrowing permission equivalent to 0.5% of states’ GSDP to those choosing option-1 to meet GST compensation shortfall.

So far, permission for borrowing an additional amount of Rs 1,06,830 crore has been granted to 28 states under this provision, the government said.

Source: Financial-Express 

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Centre to release second tranche of Rs 6,000 crore to states as part of GST compensation

Centre to release second tranche of Rs 6,000 crore to states as part of GST compensation

The Centre will release the second tranche of Rs 6,000 crore to 16 states and 3 union territories on Monday, taking the total amount released to states to meet the compensation shortfall under goods and services tax (GST) under the special window to Rs 12,000 crore.

The second tranche was raised at a weighted average yield of 4.42 per cent, the finance ministry said in a statement.

“This amount will be passed on to the States/UTs at the same interest rate, which is lower than the cost of borrowings for the States and UTs, thus benefitting them,” the ministry said.

Till date 21 states and three union territories have opted for the special window under Option one where loans raised by the the government of India are released on a back-to-back basis to states or union territories, in lieu of GST compensation cess releases.

The loans have been released to Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, UT of Delhi, UT of Jammu and Kashmir and UT of Puducherry.

The government had given two borrowing options to states to meet the compensation shortfall for 2020-21, of which Rs 1.1 lakh crore option was chosen by 21 states and two union territories.

Under this option, the Centre agreed to borrow and provide to states while the principal and interest will be serviced from the compensation cess collected. The special borrowing window coordinated by the finance ministry allows for back to back borrowing by the Centre and further transfer to states.

Some opposition-led states and union territories, including West Bengal, Rajasthan, Kerala, Chhattisgarh and Puducherry had rejected both the borrowing options provided by the Centre – Rs 97,000 crore and Rs 2.35 lakh crore.

They are also yet to decide whether to take the increased borrowing option of Rs 1.1 lakh crore, enhanced from Rs 97,000 crore earlier, basis a 7 per cent growth projection in revenues versus 10 per cent growth projection estimated by the finance ministry.

Finance minister Nirmala Sitharaman had written to these states last month, asking them to rethink their decision and come on board with the other states that will get faster access to funds.

Finance secretary Ajay Bhushan Pandey told ET in an interview that the government was open to discussion with states and will try to bring them on board.

“On revenue loss and other aspects, one can have discussions. I’m sure other states will also review their positions. We will try to convince them,” Pandey said.

Source: Economic-Times.

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GST compensation deadlock: Centre allows 20 states to mobilise Rs 68,825 crore

GST compensation deadlock: Centre allows 20 states to mobilise Rs 68,825 crore

The Centre on October 13 granted permission to 20 states to raise an additional Rs 68,825 crore through open market borrowings.

“Additional borrowing permission has been granted at 0.5 percent of the Gross State Domestic Product (GSDP) to those states who have opted for option 1 out of the two options suggested by the Ministry of Finance to meet the shortfall arising out of the Goods & Services Tax (GST) implementation,” the government said in a press release.

In the GST Council meeting held in August, two options were put forward. The 20 states that opted for option 1 are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand.

Eight states are yet to exercise an option, the statement said.

Out of the total Rs 68,825 crore, Andhra Pradesh has been allowed to borrow Rs 5,051 crore, Arunachal Pradesh Rs 143 crore, Assam Rs 1,869 crore, Bihar Rs 3,231 crore, Goa Rs 446 crore, Gujarat Rs 8,704 crore, Haryana Rs 4,293 crore, Himachal Pradesh Rs 877 crore, Karnataka Rs 9,018 crore, Madhya Pradesh Rs 4,746 crore, Maharashtra Rs 15,394 crore, Manipur Rs 151 crore, Meghalaya Rs 194 crore, Mizoram Rs 132 crore, Nagaland Rs 157 crore, Odisha Rs 2,858 crore, Sikkim Rs 156 crore, Tripura Rs 297 crore, Uttar Pradesh Rs 9,703 crore, and Uttarakhand Rs 1,405 crore.

The facilities made available to the states, who have submitted their choice, include a special borrowing window, coordinated by the Ministry of Finance, to borrow the shortfall in revenue through issue of debt. The total shortfall in the revenue of the states on this account has been estimated at around Rs 1.1 lakh crore.

The government has also included permission to borrow the final instalment of 0.5 percent of GSDP out of the 2 percent additional borrowings permitted by the government in view of the COVID pandemic, waiving the reforms condition.
The government had provided additional borrowing limit of up to 2 percent of GSDP to states. The final instalment of 0.5 percent out of this 2 percent limit was linked to carrying out at least three out of four reforms stipulated by the Centre.

“However, in case of states who have exercised Option-1, to meet the shortfall arising out of GST implementation, the condition of carrying out the reforms to avail the final instalment of 0.5 percent of GSDP has been waived,” the government statement said.

The 20 states, who have exercised Option-1, are eligible to raise an amount of Rs 68,825 crore through open market borrowings. Action on the special borrowing window is being taken separately, the statement said.

On October 12, the GST Council could not reach a consensus on borrowing options in lieu of compensation cess shortfall and Finance Minister Nirmala Sitharaman had said that some states questioned whether the Council has any authority to disallow those states that have already opted for one of the borrowing options from going ahead with their borrowing plans.

Source: Money-Control.

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GST Council may set up GoM on compensation shortfall

GST Council may set up GoM on compensation shortfall

The Goods and Services Tax (GST) Council could consider setting up a group of ministers (GoM) to resolve the row over states having to borrow from the market in order to meet the shortfall in compensation. Apart from the two options that the Centre has offered to the states, a third has emerged, which proposes that they make such borrowings jointly, rather than states taking on the entire burden. Punjab has written to the Centre, asking for a GoM to resolve the issue. Kerala and Chhattisgarh have backed the demand.

“Why not set up a GoM to decide?” said Kerala finance minister Thomas Isaac. The issue of borrowing in lieu of GST compensation can be resolved within the GoM, as in the past, he said, adding that the council can also discuss the option of the Centre offering something additional to states, such as agreeing to take on some part of the total borrowing.

The council is scheduled to meet next on October 12 to deliberate on the matter. The government has offered two options to the states to meet the GST compensation deficit – borrow Rs 1.1 lakh crore to partially meet shortfall or borrow the entire Rs 2.35 crore deficit. The GST Council meeting on October 5 could not decide on these options, with 10 states and UTs strongly opposing them. A top official from an opposition-ruled state also backed the third option, with both Centre and states sharing some burden of the borrowing. “This (borrowing) could be in proportion to the vote share of states and the Centre (in the council),” the official said.

Chhattisgarh commercial taxes minister TS Singh Deo asked why a GoM couldn’t be set up, rather than forcing states to choose. “These suggestions could be looked at,” he said. Deo also dismissed the view that the council is not mandated to vote on borrowing proposals. If the proposal has been put to the council by the Centre in lieu of compensation due to states, how can it not be decided by that forum, he asked. Some states such as Uttar Pradesh have suggested revenue augmentation measures, including raising cess on gutka, he said.

Source: Economic-Times.

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GST Council approves increased borrowing limit of Rs 1.1 lakh crore under option 1

GST Council approves increased borrowing limit of Rs 1.1 lakh crore under option 1

The GST Council has approved an increased borrowing limit of Rs 1.1 lakh crore instead of Rs 97,000 crore in the first borrowing option provided to the states.

The Centre had proposed an increased borrowing limit in the ongoing 42nd goods and services tax (GST) Council meeting headed by finance minister Nirmala Sitharaman, assuming a 7% growth rate instead of the earlier assumption of 10% over the previous financial year. States had said the increase should be based on the actual rate of 2-3% witnessed last year.

The decision is the second such after the Council unanimously to extend the GST compensation cess levy beyond 2022.

Sources aware of the development said that levy will continue till the time the principal and interest are paid off, and be reviewed and decided from time to time. The initial proposal was to extend the levy by two years till 2024.

The rift between BJP ruled and opposition led states may widen with the former set to seek faster disbursement of funds through the special borrowing window proposed by the Centre.

But opposition led states will dig in their heels, demanding that Centre borrows and provides to states, as opposed to states borrowing, since it is the statutory obligation of the government to make up for revenue loss to states.
At the GST Council meeting on August 27, the Centre proposed that the states could borrow Rs 97,000 crore, equivalent to the revenue loss due to the GST transition, or Rs 2.35 lakh crore, equivalent to the revenue loss due to the GST transition and Covid-19. In the first option, the principal and interest would be paid from the cess fund, while in the second option, the states would bear the interest.

About 20 states have opted for the first borrowing option, but others have rejected both, which may prompt voting on the matter. States may also seek for a dispute resolution mechanism.

GST Council has worked on consensus among all stakeholders since inception, with the exception of one meeting where voting took place in December last year on the issue of state level lotteries.

The GST Council will also take up procedural issues aimed at simplification besides rate rationalisation on non-alcohol based sanitizers.

Source: Times-of-India

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