Govt releases Rs 40,000 crore to states to meet GST compensation shortfall

The GST Council had earlier approved a mechanism that included special borrowing by the Centre for the states to tackle the compensation shortfall.

The central government has released Rs 40,000 crore to states and Union territories (UTs) under the back-to-back loan facility to meet the shortfall in GST compensation. The move comes after states had flagged the issue in the last GST Council meeting held in Lucknow.

The GST Act came into effect from July 1, 2017, and provided assurance to states that if the growth in revenue post GST was less than 14 per cent, they will get compensated for the shortfall for a period of five years through special cess on certain categories of goods.