Govt releases Rs 36,400 crore as GST compensation to states, UTs

The Centre on Thursday released Rs 36,400 crores as Goods and Services Tax (GST) compensation to the states and Union territories for the December 2019-February 2020 period. The money will help states and UTs fund the battle against the Covid-19 pandemic.

GST compensation worth Rs 1,15,096 crores was released by the central government for the April-November 2019 period.

GST compensation was a long-standing demand of states and UTs as their resources were adversely hit due to the lockdown.

As states were struggling to meet their financial obligations, many resorted to increasing taxes on liquor and fuel. It started with Delhi Chief Minister Arvind Kejriwal raising taxes by 70 per cent and soon other states followed suit. Uttar Pradesh, Karnataka, Andhra Pradesh and West Bengal used increased taxes on alcohol and fuel as a way to mop up revenue, which had dwindled due to Covid 19.

State governments earn revenue through fuel, alcohol, property registration and taxes on the purchase of vehicles. All of these avenues had dried up due to lockdown leaving the states with very little in their kitty.