Home Business Centre's GST Compensation Formula gets Nod from All States

Centre’s GST Compensation Formula gets Nod from All States

Under the terms of Option-1 of the GST compensation formula, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the states are also entitled to get unconditional permission to borrow the final instalment of 0.50 per cent of Gross State Domestic Product (GSDP) out of the 2 per cent additional borrowings permitted by the Centre under the Atma Nirbhar Abhiyaan on May 17.

New Delhi, December 6, 2020 (IANS): All the 28 states and three Union territories with legislature have decided to go for the Centre-suggested compensation formula to meet the revenue shortfall arising out of the GST implementation.

Jharkhand is the only remaining state, has now communicated its acceptance of Option-1 given by the Centre.

All the three Union territories with Legislative Assemblies, which are members of the GST council, have already decided in favor of Option-1.

GST-Utkal-Today
Image- iStock

Special Borrowing Window for GST Compensation Formula:

The central government has set up a special borrowing window for the states and union territories who choose Option-1 to borrow the amount of shortfall arising out of GST implementation.

The window has been operationalized since October 23 and the Centre has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it onto the ones who chose Option-1.

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Image- Twitter

Also Read: Changes in GST registration process to be implemented soon

Jharkhand also to Receive GST Compensation:

Now Jharkhand will also receive funds raised through this window starting from the next round of borrowing.

The next instalment of Rs 6,000 crore will be released on December 7.

Under the terms of Option-1, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the states are also entitled to get unconditional permission to borrow the final installment of 0.50 percent of Gross State Domestic Product (GSDP) out of the 2 percent additional borrowings permitted by the Centre under the Atma Nirbhar Abhiyaan on May 17.

This is over and above the Special Window of Rs.1.1 lakh crore.

On receipt of the choice of Option-1, the Centre has granted additional borrowing permission of Rs 1,765 crore to Jharkhand (0.50 percent of the state’s GSDP).

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