The central government approved the whole GST compensation due to states by issuing Rs 86,912 crore on Tuesday, according to the finance ministry.

The GST compensation fund will release Rs 25,000 crore, while the Centre would release the remaining Rs 61,912 crore from its own resources pending cess collection. The entire compensation released is divided into three parts: Rs 17,973 crore for April and May dues, Rs 21,322 crore for February-March dues, and Rs 47,617 crore for compensation payable till January 2022.

"The Indian government has released an amount of Rs 86,912 crore to cover the whole amount of GST compensation due to states until May 31, 2022. This decision was made to assist states in managing their resources and ensuring that their programmes, particularly capital expenditures, are successfully implemented during the fiscal year "In a statement, the ministry stated. The Goods and Services Tax (GST) was implemented in the country on July 1, 2017, and states were guaranteed reimbursement for any revenue lost as a result of the GST implementation for a period of five years.

Cess is charged on certain products to provide compensation to states, and the amount collected is credited to the compensation fund. The compensation fund for bi-monthly GST compensation to states for the years 2017-18 and 2018-19 was released on time. COVID-19 exacerbated the gap between protected revenue and actual revenue receipt, including a reduction in cess collection, because the states' protected revenue has been growing at a 14 percent compounded rate while the cess collection has not increased at the same rate.

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