Payment of Rs 5,000 crore paid to USA to make up GST compensation shortfall
The Ministry of Finance, Expenditure Department, today released the 16th weekly installment of Rs.5,000 crore in the United States to close the GST compensation gap.
Out of this amount, an amount of Rs.4,597.16 crore was disbursed to 23 States and an amount of Rs.402.84 crore was disbursed 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 have no revenue shortfall due to the implementation of GST.
“So far, 86% of the total estimated GST compensation shortfall has been paid to the States and UTs with the Legislative Assembly. amount of Rs.8,270.07 crore was remitted to the 3 UTs with the Legislative Assembly,” the Ministry of Finance said in a statement.
The Government of India had introduced a special borrowing window in October 2020 to cover the estimated Rs 1.10 crore Lakh revenue shortfall resulting from the implementation of the GST. Borrowing is done through this window by the Government of India on behalf of the States and UTs. 16 borrowing cycles have been carried out to date from October 23, 2020.
The amount released this week was the 16th installment of those funds provided to states. The amount was borrowed this week at an interest rate of 4.6480%. So far, an amount of Rs 95,000 crore has been borrowed by the central government through the special borrowing window at an average interest rate of 4.7831%.
In addition to providing funds through the Special Borrowing Window to bridge the revenue shortfall due to the implementation of the GST, the Government of India has also provided additional borrowing authority equivalent to 0.50% of the States Gross Domestic Product (GSDP) to States choosing Option-I to fill the GST offset gap to help them mobilize additional financial resources. All States indicated their preference for Option-I. Authority to borrow the entire additional amount of Rs.1,06,830 crore (0.50% of GSDP) has been granted to 28 states under this provision.
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