GST Compensation Regime

Subject – Economy

Context – GST compensation regime: Several Opposition-ruled states seek extension

Concept –

States were guaranteed compensation under GST for the revenue gap between actual collections and the protected amount based on a 14 per cent compounded rate from the base year 2015-16 for five years after the GST rollout, until June 2022.
Last year, the government had decided to borrow to meet the compensation cess deficit through back-to-back loans to states.
In FY 2020-21, an amount of Rs 1.10 lakh crore was released to states under the back-to-back loan arrangement.

To know more about GST Council and Compensation Cess, please click here.