Centre releases Rs 24,500 cr to compensate states after GST implementation

Karnataka got maximum compensation from the Centre at Rs 3,271 cr, followed by Gujarat at Rs 2,282 cr

The revenue loss to states on account of GST implementation was Rs 24,500 crore between July-October and the Centre has released compensation to make up for it, Parliament was informed on Friday.

As per the details of GST compensation released to states as on November 30, Karnataka got maximum compensation from the Centre at Rs 3,271 crore, followed by Gujarat (Rs 2,282 crore) and Punjab (Rs 2,098 crore).

"...the revenue loss due to implementation of GST to the states for month of July to October has been estimated Rs 24,500 crore and the same amount has been released to the states as compensation to make up for the loss of revenue on bi-monthly basis for the month of July-August, 2017, and September-October, 2017," Minister of State for Finance Shiv Pratap Shukla said in a written reply in the Lok Sabha.

Under the Goods and Services Tax (GST) regime, a cess is levied on luxury, demerit and sin goods to make good the loss suffered by the states on account of roll out of the new indirect tax regime. This is levied on top of the highest tax rate of 28 per cent on this goods.

"Since the rate of cess shall be such so as to maintain the pre-GST tax incidence on such goods therefore there may not be much difference in total tax incidence (tax plus cess) on these goods between the pre-GST and post-GST regime," Shukla said.

The other states that required hefty compensation include Rajasthan (Rs 1,911 crore), Bihar (Rs 1,746 crore), Uttar Pradesh (Rs 1,520 crore), West Bengal (Rs 1,008 crore) and Odisha (Rs 1,020 crore).

In a seprate reply, Shukla said the GST anti-profiteering authority has till December 26 received 169 complaints alleging suppliers of goods have not passed on benefit of cost reduction to customers.