GST cess saw deep of 42% in 2020

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The Centre made up a 42% shortfall in Goods and Services Tax compensation cess collection in 2019-20 by using balance of cess from previous years plus a transfer from the Consolidated Fund of India. GST Council was slated to meet this month to discuss the possibility of market borrowing to meet likely future shortfalls, is yet to do so.

The final instalment of GST compensation for the year ₹13,806 crore for March has been released to the States. This completes the delayed compensation payments for the financial year.

During 2019-20, the cess collected was only ₹95,444 crore, around 58% of the ₹1.65 lakh crore that was paid out to States. In order to release the compensation for 2019-20, balance of cess amount collected during 2017-18 and 2018-19 was also utilised. In addition, the Centre had transferred ₹33,412 crore from the Consolidated Fund of India to the Compensation Fund as part of an exercise to apportion balance of IGST pertaining to 2017-18.

After the GST Council’s meeting, Finance Minister Nirmala Sitharaman told journalists that on the request of all State Finance Ministers, another meeting of the Council was about to held in July “to discuss exclusively one agenda point, and that is compensation cess which has to be given to the States, and if at all it results in some kind of borrowing, how and who is going to pay for it”, but yet to be scheduled.

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