The central government has declared to allocate Rs 30,000 crore as GST compensation to states for the financial year FY 21, the finance ministry said yesterday.
Interestingly, last week while giving a reply in the budget session, Finance Minister Nirmala Sitaraman had acknowledged in the Rajya Sabha that for the month of March 2021, States will be allocated Rs 30,000 crores as GST compensation. However, the aforesaid compensation that is “due to states prior to the COVID pandemic” has already been paid.
Furthermore, the centre has also apportioned an additional whopping amount of Rs 14,000 crore in the form of “Adhoc settlement of integrated GST” on March 30.
“Taking into account the release of GST compensation, back-to-back loan, and Adhoc IGST settlement, a balance of Rs 63,000 crore GST compensation is pending to states/UTs for FY 2020-21,” the finance ministry said.
It is worth mentioning here that in the month of October last year, the Centre released Rs 1.10 lakh crore to states by way of back-to-back loans. The reason being, the states were not able to collect the required amount of GST due to the Corona pandemic. The abovementioned decision to allocate loans was made by the GST Council 
Get to know about GST (Goods and Services Tax) council 1st to 43th meeting updates and decisions taken by members. We have covered 1st meeting to last meeting decisions.
As per the estimates of the rating agency Investment Information and Credit Rating Agency of India Limited (ICRA), for meeting consumption expenditure and investment expenditure, the state machinery of the respective states will require funds within the domain of Rs 2.7 lakh crore to Rs3 lakh crore and consequently, they would face a shortfall in the domain of Rs 1.6 lakh crore to 2 lakh crore.
Thanks to the positive effects from steps taken by the tax administration. Surprisingly, due to economic recovery, GST collections have been clocking a little more or nearly Rs 1 lakh crores steadily since October 2020.
