The above topic states about the Fiscal Year 2021 compensation on GST. RBI had facilitated
special borrowing power under the center that raises low-cost loans this would be the bridge to
the cess. The amount being mobilized and increased the chances of raising loans to the country.
The parliament of India had decided to release the amount of 81,179 crores to the state
governments towards fully compensating them from the Goods and Service Tax (GST) revenue
shortfall for the FY 2020-2021. Many other countries were raised vocal about these dues but the
state had not yet categorically endorsed the claims. The state minister of finance Pankaj
Chaudhary is waiting for the written reply letter from the Lok Sabha, regarding the issues of dues
to be settled down. 2.82 lakh crore for 2020-2021 made the huge amount required to compensate
the state’s total GST. Over 85,000 crores will be collected and transferred to the states in the year
on demerit goods the designated cesses, through this mode the amount has transferred to the
states. another 1.1 lakh crore under the special back-to-back loan facility. To increase the state’s
borrowing requirements, the government has yet to start the loan mechanism and this helps us
show the delayed release of the compensation amounts under the law and were planning to
release them promptly on a bi-monthly basis.
2021 is the year where the rate of cess proceeds to fall between the states. The weighted average
GST rate will be around 11% this is because of the rate cuts series during the pandemic and this
was against a revenue-neutral rate of around 15%, this was before the July-2017 launch of the
designated based consumption tax. We can even observe that in the current financial year, the
rate shortfall of GST has been massive Rs. 2.6 lakh crore. The estimations made that this would
be even higher in upcoming days.
Chaudhary stated in the lower house regarding the states and their dues. The following points
give us the information regarding this –
● Maharashtra – Rs 15,138 crore
● Uttar Pradesh – Rs 7,109 crore
● Gujarat – Rs 6,583 crore
● Tamil Nadu – Rs 6,155 crore
Recently, the finance minister of West Bengal had flagged the issue of unpaid GST
compensation for the financial year, which has been estimated to be Rs 74,398 crore for all the
states.
Once the government slowly raised from the covid-19 cases and by easing the lockdowns,
businesses raised 5.5 crores in June to generate the e-way bills. Earlier in May 3.99 crore so the
latest one will indicate the smart recovery of trade and business. Within April the e-way bills will
be generated up to 5.9 crores. Thus the release of Rs 70,000 crore will be funded on July 15 from
the borrowings of the Union Government in 5-year securities for 6500 crores in the current
financial year at weighted average yields of 5.60% and 4.25% per annum and respectively.
