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Sunday, 06 July 2025 8.09 PM IST

Centre releases Rs 75,000 crore to states as GST compensation; Rs 4122.27 crore for Kerala

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nirmala

NEW DELHI: The government on Thursday said it has released Rs 75,000 crore to the states and Union Territories to compensate them for the shortfall in GST revenue.

The Centre sanctioned Rs 4122.27 crore to Kerala as GST compensation. Kerala had demanded an immediate release of Rs 4,524 crore in GST arrears for 2020-21.

The GST Council in its meeting on May 28 had decided that the central government would borrow Rs 1.59 lakh crore and release it to the states and UTs with the legislature on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the compensation fund.

"Ministry of Finance has released today Rs 75,000 crore to the States and UTs with Legislature under the back-to-back loan facility in lieu of GST Compensation. This release is in addition to normal GST compensation being released every 2 months out of actual cess collection," the ministry said in a statement.

It further said that all eligible states and UTs (with the legislature) have agreed to the arrangements for the funding of the compensation shortfall under the back-to-back loan facility.

"For effective response and management of COVID-19 pandemic and a step-up in capital expenditure, all States and UTs have a very important role to play. For assisting the States/UTs in their endeavour, Ministry of Finance has front-loaded the release of assistance under the back-to-back loan facility during FY 2021-22 Rs 75,000 crore (almost 50 per cent of the total shortfall for the entire year) released today in a single instalment," the ministry added.

The balance amount will be released in the second half of 2021-22 in steady instalments.

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