Centre releases Rs 8,698 crore as GST compensation to states

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BENGALURU: The Centre has released Rs 8,698 crore to states to compensate them for revenue loss following GST implementation


  • The Center has released Rs 8,698 crore to the GST implementation.
  • All states, except Rajasthan and Arunachal Pradesh, have been given compensation for the first two months (July-August) after GST rollout.
  • The compensations are levied on sin and luxury goods over and above the
    highest tax rate of28 percent under GST.

Rs 8,698 crore has been paid to states as compensation for July and August. This is 58 percent of total cess revenue of Rs 15,060 crore in the two months, “Bihar Deputy Chief Minister Sushil Modi said.

Though the compensation payout stands at about 58 percent of the total amount of Rs 15,060 crore raised from cess during the first two months of the GST rollout, it is expected to rise going ahead as the revenue losses to states were subdued due to higher-than-expected VAT collections in June, officials said.

Rs 8,698 crore is a provisional figure and may change at the end of the year when revenue numbers would be finalized. The compensation the payout is also expected to increase going ahead as July numbers were significantly lower due to high VAT collections by states,” one of the officials said.

Last month, all states were asked to furnish data on taxes collected in the month of July and August 2017 from taxes subsumed under GST. For Rajasthan, the base year revenue for the year 2015-16 was Rs 17,159crore, which when calculated for a month after projecting an increase of 14 percent per annum as per the Compensation Act comes out to be Rs 1,858crore.

The GST (Compensation to the Loss of Revenue) Act has been projected revenue growth for states during the five-year transition period to 14 percent and the fiscal year of 2015-16 compensation amount, with the base year tax revenue including state VAT, Central sales tax, entry tax, octroi, local body tax, tax on luxuries, tax on advertisements.

Also Read: GST Composition scheme for small taxpayers extended to Rs. 1.5 crore

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