Srinagar: Centre has opened its purse strings and paid more than Rs 2000 crore to Jammu and Kashmir government as Goods and Service Tax (GST) compensation after the union territory recorded a shortfall in the revenue collection due to the Covid-19 pandemic.
Jammu and Kashmir is one of the most affected states and union territories due to COVID. There has been a dip of more than 25 percent in the GST collection so far.
Against nearly Rs1700 crore last year in the first quarter, Jammu and Kashmir has realized Rs 1,169 crore GST this year (April-August).
To compensate the shortfall, the Centre released Rs 2104 crores for Jammu and Kashmir.
This is much higher than Himachal Pradesh, Puducherry and Goa, which received Rs 1623, 564, 987crore respectively as GST compensation this year so far.
Maharashtra has received Rs 22485 GST compensation.
Arunachal Pradesh is the only state in India, which has not sought GST compensation for the shortfall in the realization of the cess.
GST compensation for 28 state governments and three Union Territories for April-July have been pegged at Rs 1.51 lakh crore.
Last month, the Centre gave states two options for borrowing the shortfall in GST compensation. One included the shortfall arising out of GST implementation (calculated at Rs. 97,000 crores approximately). It will be borrowed by States through the issue of debt under a Special Window coordinated by the Ministry of Finance.
The second option involved the entire Rs 2.35 lakh crore (including the COVID-impact portion) may be borrowed by States through market debt.
While many states have objected to Centre’s proposal, sources said Jammu and Kashmir, which is run by the Centre, will consider the option of market borrowing.
“This year the GST realization has been very less due to the COVID 19 pandemic. Jammu and Kashmir administration has deliberated over it. They will opt for market borrowing to compensate for the GST revenue loss,” they said.
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.
Kashmir witnessed two spontaneous lockdowns after the revocation of article 370 and the spread of COVID -19. Business activities took a back seat and the losses have mounted to over Rs 40,000 crores.