Centre releases first tranche of GST dues, Rs 6000 crores transferred to 16 states & 2 UTs

In a big relief to states, Centre on Friday released first tranche of pending GST dues, borrowing and transferring Rs 6000 crores to 16 states and two Union Territories (UTs), opening a special borrowing window to dress shortfall in GST. " Government of India has evolved a special borrowing window to dress shortfall in GST collection during year 2020 - 2021. 21 States and 2 Union Territories opted for this special window involving back-to-back borrowing coordinated by Ministry of Finance," Finance Ministry said in a statement.

According to details put out by Ministry of Finance, borrowing is at an interest rate of 5.19 per cent and is intended to make weekly releases of Rs 6,000 crore to States. ter of borrowing is expected to be broly in range of 3 to 5 years.

states and UTs that fall under this are Andhra Presh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Presh, Karnataka, Mhya Presh, Maharashtra, Meghalaya, Odisha, Tamil Nu, Tripura, Uttar Presh and Uttarakhand, and Delhi and Jammu and Kashmir. Out of aforementioned states and UTs, five states have t recorded a shortfall of GST compensation. 

Re: Centre Diverted GST Compensation Funds, Observes CAG; Shiv Sena Alleges 'breach Of Trust'

Re: Rs.20,000 Crore Compensation Cess To Be Released Tonight; Impasse Over GST Dues Continues

Row over GST compensation 

Earlier Finance Ministry h rejected demand of multiple states and proposed two options for meeting shortfall in GST compensation. First, it suggested that states could borrow Rs.97,000 crore ( revenue shortfall arising on account of GST implementation and t taking into account COVID-19) with entire principal and interest repayment of debt to be met through cess collection in subsequent years. ditionally, states have been allowed to borrow an ditional 0.5% points under FRBM Act.

But if states choose to borrow entire amount of Rs. 2.35 lakh crore, only principal amount shall be repaid from cess. In such a scenario, states will have to bear interest burden. Several CMs such as Delhi CM Arvind Kejriwal, Jharkhand CM Hemant Soren, West Bengal CM Mamata Banerjee, Tamil Nu CM Edappi Palaniswami, Kerala CM Pinarayi Vijayan, Telangana CM K Chandrasekhar Rao, and Chhattisgarh CM Bhupesh Baghel h written to PM Modi urging a rethink on GST compensation options.

Re: DMK MP Accuses FM Of Diluting GST Compensation Issue, Demands White Paper On Ecomy

Re: Tamil Nu Gets Centre's d To Borrow Rs 9,627 Cr From Market To Plug GST Revenue Hole

(With ncy Inputs)