Lok Sabha Question No. 3177 (UNSTARRED), answered on 2021-03-15
Subject: GST Debt on States
Ministry: FINANCE
Asked by: Mimi Chakraborty

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA

## UN-STARRED QUESTION NO- 3177 ANSWERED ON-15/03/2021

## GST DEBT ON STATES

## 3177. MS. MIMI CHAKRABORTY:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is a fact that the Goods and Services Tax (GST) debt on the States would destroy the financial  health  and  lead  to  massive  debt  to  the  States  in  the  Covid-19  crisis  and  if  so,  the details thereof;
- (b) whether the debt accumulated is more than 8 lakh crore gross fiscal deficit of all the States of the country;
- (c) if  so,  whether  as  per  the  GST  Act  2017,  the  Government  is  duty-bound  to  compensate  the States therefor; and
- (d) if  so,  the  suggestions  received  from  the  States  in  the  41 st meeting  of  GST  Council  and  the implementation thereof by the Government?

## ANSWER

## MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) to (d): In the wake of COVID-19 pandemic the GST collection as well GST compensation cess collection  declined  sharply  in  FY  2020-21,  due  to  which  GST  compensation  requirement  to  all States/UTs increased. Such increase in the GST compensation requirement of States/ UTs for FY 2020-21 could not be met from the GST Compensation Fund due to inadequate amount in GST Compensation Fund.

As per opinion of Attorney General on short Compensation Cess collection and deliberation in the 41st & 42nd GST Council meeting, in order to meet the shortfall in GST Compensation to be paid to States, it has been decided that under the special window, ₹ 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. As per this decision, Central Government has released ₹ 1,06,104 crores to the States/UTs till 08.03.2021 as per Annexure. All States have decided to take benefit of this assistance to tide over the temporary resource  gap. In addition,  depending  on  the  amount  available  in  the  Compensation  Fund,  Centre  has  also  been releasing the regular GST compensation to States to make up for GST revenue shortfall.  The states will  be  paid  full  GST  Compensation  as  per  GST  (Compensation  to  States)  Act,  2017  for  the transition  period  by  extending  the  levy  of  Compensation  cess  beyond  5  years  to  meet  the  GST revenue  shortfall  as  well  as  servicing  the  loan  borrowed  through  special  window  scheme. Therefore, this loan borrowed by Central Government and being passed on to States in lieu of GST Compensation has no effect on the financial health of States/ UTs.

*****

## Details of payment of back to back loan in lieu of GST Compensation Shortfall

(Amount ₹ in Crore)

| Name of State/UT   |   Amount released under Special borrowing scheme (as on 08.03.2021) |
|--------------------|---------------------------------------------------------------------|
| Andhra Pradesh     |                                                                2307 |
| Arunachal Pradesh  |                                                                   0 |
| Assam              |                                                                 992 |
| Bihar              |                                                                3898 |
| Chhattisgarh       |                                                                2655 |
| Goa                |                                                                 838 |
| Gujarat            |                                                                9204 |
| Haryana            |                                                                4344 |
| Himachal Pradesh   |                                                                1714 |
| Jharkhand          |                                                                1442 |
| Karnataka          |                                                               12383 |
| Kerala             |                                                                4923 |
| Madhya Pradesh     |                                                                4533 |
| Maharashtra        |                                                               11954 |
| Manipur            |                                                                   0 |
| Meghalaya          |                                                                 112 |
| Mizoram            |                                                                   0 |
| Nagaland           |                                                                   0 |
| Odisha             |                                                                3815 |
| Punjab             |                                                                7138 |
| Rajasthan          |                                                                4249 |
| Sikkim             |                                                                   0 |
| Tamil Nadu         |                                                                6229 |
| Telangana          |                                                                2197 |
| Tripura            |                                                                 226 |
| Uttar Pradesh      |                                                                5995 |
| Uttarakhand        |                                                                2312 |
| West Bengal        |                                                                3784 |
| UT of Delhi        |                                                                5854 |
| UT of J&K          |                                                                2268 |
| UT of Puducherry   |                                                                 741 |
| Total              |                                                              106104 |