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GST Compensation: Centre Transfers First Tranche Of Rs 6,000 Crore To 16 States, 2 UTs

After the previous GST Council meeting, the Centre said 21 states were in favour of borrowing the amount of shortfall arising out of GST implementation.

Oct 24, 2020 / 09:26 AM IST

The Centre has borrowed and transferred Rs 6,000 crore to some states and  UTs as compensation for the shortfall in Goods and Services Tax (GST) collection during FY21.

This first tranche was made to 16 states and 2 UTs under a special borrowing window, the Ministry of Finance said on October 23. The government will release Rs 6,000 crore weekly to the states.

Also read: Interview | GST has birth defects; positive nominal growth in FY21 possible: NR Bhanumurthy

"The borrowing is at an interest rate of 5.19 percent. It is intended to make weekly releases of Rs 6,000 crore to the states. Tenor of borrowing is expected to be broadly in the range of 3 to 5 years," the finance ministry said in a statement.

The government released the first tranche of Rs 6,000 crore to Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh and Uttarakhand, Delhi and Jammu and Kashmir.

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Of the 21 states and two Union Territories that opted for the special borrowing window, five did not have any shortfall on account of GST compensation.

After the previous GST Council meeting, the Centre said 21 states were in favour of borrowing the amount of shortfall arising out of GST implementation.

The finance ministry had on October 13 granted permission to 20 states to raise an additional Rs 68,825 crore through open market borrowings.
Moneycontrol News
first published: Oct 24, 2020 09:26 am

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