The Union Government has confirmed that it has cleared all pending Goods and Services Tax (GST) compensation dues to States and Union Territories, except for Arunachal Pradesh and Manipur. The dues for these two States remain pending as the required audit certificates from the Comptroller and Auditor General (CAG) are yet to be received, the Ministry of Finance informed the Rajya Sabha.
Responding to a question in Parliament, Minister of State for Finance Shri Pankaj Chaudhary said that under the GST (Compensation to States) Act, 2017, compensation was provisionally calculated and released at the end of every two months. The final settlement is made after receipt of audited revenue figures from the CAG.
“The Centre has already released the entire amount of provisionally admissible GST compensation for revenue losses arising due to the implementation of GST from July 1, 2017, to June 30, 2022,” the Minister said.
New Mechanism Post-Compensation Era
Addressing concerns about future revenue support, the Minister informed that the GST Council, in its 54th meeting held on September 9, 2024, recommended the formation of a Group of Ministers (GoM). This GoM, headed by the Union Minister of State for Finance, has been tasked with proposing a mechanism to replace the compensation cess following its abolition.
The GST compensation scheme, which was introduced to compensate States for any revenue shortfall due to the implementation of GST, officially ended on June 30, 2022.
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