Finance Ministry Confirms That Some States Have Sought Extension Of GST Compensation For A Further Period Of Five Years.

As per section 18 of the Constitution (One Hundred and First Amendment) Act, 2016, Parliament shall, on the recommendation of the GST Council, provide for compensation to the States for loss of revenue arising on account of the GST for a period of five years.

The Union Minister of State for Finance, Shri Pankaj Chaudhary, has given a written reply to a question in Rajya Sabha on July 19, 2022.

The average monthly gross GST collection for the first quarter of FY 2022-23 was Rs. 1.51 lakh crore, compared to Rs. 1.10 lakh crore in the first quarter of the previous fiscal year, representing a 37% increase.

As per Section 7 of the GST (Compensation to States) Act, 2017, the States are required to be compensated for loss of revenue due to the implementation of GST (w.e.f. 01.07.2017) for a 5 year period. During the transition period, the States' revenues are protected at a 14% growth rate per annum over the base year revenue (2015-16). Accordingly, the states are being compensated for any shortfall against their protected revenue.

Release ID: 1842755

Posted On: 19.07.2022

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