Credit Rating Agency ICRA has reported that there could be a shortfall of around ₹15,000 to ₹25,000 crores in GST Compensation Fund to state ministry in the upcoming financial year 2020. GST compensation is due for the October 2019 to January 2020 period is around at ₹60,000-70,000 crores. So far, the Centre has already released ₹1 lakh crores worth compensation for the February to September 2019.
The Centre has a cess collection of ₹98,000 crores in Financial year 2020, out of which ₹70,500 crores had been collected till December 2019. There has been an gradual increase in the compensation released to states in financial year 2020.In Budget 2020 speech, Finance Minister Nirmala Sitharaman gave a slight hint to transfer balance compensation of the previous years to the GST Compensation Fund in two instalments.
Till today, the ministry has released the compensation cess of ₹35,300 crores for August to September 2019 from ₹17,790 crores for April to May 2019 and ₹ 27,960 crores for June to July 2019. So we can see that compared to 3.4% growth in the GST collection in the April to October, 2019 period, it improved to 7.7% in November to January 2020.
State ministry is expected a better solution of this delay as we all know state was furious with the delay in Compensation cess in last year and caused a lot of trouble for Union department.