Union Finance Minister Nirmala Sitharaman on Saturday said the entire pending dues of the Goods and Services Tax compensation cess to states worth Rs 16,982 crore for June will be cleared today.

“Although this amount is not really available in the compensation fund as of today, we have decided to release this amount from our own resources and the same amount will be recouped from the future compensation cess collection,” she said after a GST Council meeting.

The finance minister stated that this payment will clear the compensation dues for five years.

In order to convince states to shift to GST from the earlier tax regime, the Centre promised to make up for any shortfall in the states’ tax revenues for five years through the GST compensation cess. The compensation period ended on June 30. Many states want this compensation period to be extended whereas the Centre does not.

At a press conference on Saturday, Sitharaman also said, “In addition, Centre would also clear the admissible final GST compensation to those states who has provided the revenue figures as certified by the accountant general of the states amounting to Rs 16,524 crore.”

She further announced that the GST Council has reduced the tax rate on several items, including liquid jaggery and pencil sharpeners.

Also read: With the Centre refusing to pay compensation to states, is GST nearing an end?