Srinagar, July 23: In what could provide a much-needed liquidity boost to Jammu and Kashmir, the Central government has released Rs 1813 crore to the Union Territory as GST compensation.
As the COVID19 pandemic affected the economy badly, there was a shortfall in GST compensation in J&K as well as across India.
To tide over the resource gap of states, the central government has released Rs 75000 crore as GST compensation out of which J&K will get Rs 1813.73 crore.
A senior finance department official informed that Rs 1813.73 crore has been released to J&K under a special borrowing scheme to meet the GST shortfall.
He further informed that J&K has received over Rs 7400 crore as GST compensation from July 2017 till date from centre post implementation of one tax one country regime.
Subsequent to the 43rd GST Council meeting held on 28.05.2021, it was decided that the central government would borrow Rs 1.59 lakh crore and release it to states and UTs with Legislature on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in the Compensation Fund.
“This amount is as per the principles adopted for a similar facility in FY 2020-21, where an amount of Rs 1.10 lakh crore was released to states under a similar arrangement. This amount of Rs 1.59 lakh crore would be over and above the compensation in excess of Rs 1 lakh crore(based on cess collection) that is estimated to be released to States/UTs with Legislature during this financial year. The sum total of Rs 2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22,” reads a statement of Union Finance Ministry.
All eligible States and UTs (with Legislature) which includes J&K have agreed to the arrangements of funding of the compensation shortfall under the back-to-back loan facility. For effective response and management of COVID-19 pandemic and a step-up in capital expenditure all States and UTs have a very important role to play.
For assisting the states/UTs in their endeavour, the Ministry of Finance has frontloaded the release of assistance under the back-to-back loan facility during FY 2021-22 RS 75, 000 crore (almost 50 % of the total shortfall for the entire year) released today in a single instalment. The balance amount will be released in the second half of 2021-22 in steady instalments.
On July 6, 2017 the erstwhile state had taken the first step towards adopting the GST regime with the President of India giving assent to the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017. Resultantly, the One Hundred and First Amendment Act, 2016 to the Constitution of India that paved the way for introduction of GST in the country, became applicable to Jammu and Kashmir also.