The Ministry of Finance is today releasing Rs 6,000 crore as the second tranche to 16 States and 3 Union Territories under the special window to states for meeting the GST compensation cess shortfall. 21 States and 3 UTs have so far opted for the Special Window under Option I and the finance ministry has facilitated loans of Rs 12,000 crore to date under the special window, said a statement by the Ministry of Finance. The government added that the amount was raised at a weighted average yield of 4.42 per cent and it will be passed on to the states at the same interest rate, which is lower than the cost of borrowings for the states and will thus benefit them.
The loans have been released to Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand. UT of Delhi, Jammu and Kashmir, and Puducherry also received the loans.
It is to be noted that the issue of GST compensation cess shortfall heated up between the Centre and states in the GST Council meeting. While the BJP-led states easily accepted one of the two options, the Centre had given, the opposition-led states confronted the options given by the Centre. However, FM Nirmala Sitharaman had said that nobody is going to be denied the compensation which has arisen out of implementation of GST and COVID impact.
Meanwhile, during the 42nd Goods and Services Tax (GST) Council meeting, it was decided to extend compensation cess beyond 2022. Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June 2022, for such period as may be required to meet the revenue gap, the ministry had said in a statement. The government had also disbursed the compensation cess collected this year amounting to about Rs 20,000 crore.
