Many states request GST compensation extension beyond
5 years: FM Nirmala Sitharaman
Many states have requested extension of the
compensation mechanism under the GST beyond June 2022,
Finance Minister Nirmala Sitharaman said on Monday.
Under the Goods and Services Tax (GST) law, states were
guaranteed to be compensated bi-monthly for any loss of
revenue in the first five years of GST implementation
from July 1, 2017
The shortfall is
calculated assuming a 14 per cent annual growth in GST
collections by states over the base year of 2015-16. The
5-year period ends in June 2022.
The compensation amount to
be paid from the compensation fund is arrived at by
levying cess on top of the highest tax slab on luxury,
demerit and sin goods.
In a written reply in the
Lok Sabha, Sitharaman said the central government is
committed to giving GST compensation to states/UTs for 5
years as per the Constitutional provision.