States' GST compensation requirement to swell to Rs 4.1 trn in FY21

This is equivalent to 2.1 per cent of the country's estimated GDP

With the Covid-19 pandemic crippling collections of states, their GST (Goods & Services Tax) requirement is projected to swell to Rs 4.1 trillion in this fiscal, equivalent to 2.1 per cent of the country’s estimated GDP.

The total GST compensation for FY20 was estimated at Rs 1.7 trillion or 0.8 per cent of the GDP in FY20. Of this, the Government of India (GoI) released Rs 1.2 trillion to the state governments in that year, leaving an unpaid balance of Rs 505 billion for FY20.

“Moreover, we estimate that the closing balance of the GST Compensation Fund was a modest Rs 255