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GST compensation: Centre releases 729 crore to J&K; outstandings cross Rs 829 crore


Srinagar:  Centre has released over Rs 700 crore to Jammu and Kashmir as GST compensation to fill up the resource gap following COVID-19 first wave last year.

With this, the outstanding dues of Union Territory towards the Centre has now crossed Rs 800 crore.


Jammu and Kashmir’s economy has gone downhill due to the repeated lockdowns in the last three years. Traders claim that Kashmir incurred a loss of over Rs 45,000 crores in 2019 and 2020 due to back-to-back lockdowns. This year the lockdown has cost Jammu and Kashmir Rs 1,000 crores so far.

As such the business fraternity has been unable to file GST returns resulting in a shortfall.

As per documents, the Centre last year released Rs 757 crore to Jammu and Kashmir. By May, the union territory’s outstanding towards the Centre has reached Rs  829 crore.

“This year the GST realization has been very less due to the second COVID 19 wave. So the union territory for the second consecutive year considered borrowing money from the Centre to compensate the shortfall,” sources said.

J&K, as per data, has received Rs 6631 crore as GST compensation from July 2017 till the last financial year.

Figures suggest that over Rs 81,000 crore GST compensation is due to states for 2020-21.  For April-May Rs 55,345 crore is outstanding.

Maharashtra tops the states with Rs 15,138 crore liability followed by  Karnataka (Rs 7,202 crore), Uttar Pradesh (Rs 7,109 crore), Gujarat (Rs 6,583 crore), Tamil Nadu (Rs 6,155 crore), Delhi (Rs 5,190 crore), West Bengal (Rs 3,911 crore) and Punjab (Rs 3,752 crore).

North-eastern states Nagaland, Mizoram, Manipur and Sikkim has recorded the lowest GST compensation from the Centre. While for Nagaland, Mizoram, Manipur, the GST compensation is zero, for Sikkim it is just Rs 30 crores during the last financial year.

As per provisions in Section 7 of the GST (Compensation to States) Act, 2017, loss of revenue to the states on account of implementation of Goods and Services Tax shall be payable during the transition period.

Similarly, the compensation payable to a state shall be provisionally calculated and released at the end of every two months during a transition period of five years.