The Centre said on Thursday that it has released Rs 36,400 crore as devolution of Goods and Services Tax to states. The funds are for the period from December 2019 to February 2020, the government said in a press release.
It added that it has released the amount due to the revenue crunch many states are facing, as a result of the shutdown in economic activity to control the spread of the novel coronavirus. Chief ministers of several states had in a meeting with Prime Minister Narendra Modi last month urged him to release GST compensation due to the states.
“The GST Compensation of Rs 1,15,096 crore for period April-November 2019 had already been released by the Central Government to the states/UTs [Union Territories] with legislature,” the press release added.
Some states have increased taxes on alcohol to cover the shortfall in finances. An affidavit the Delhi government filed in the High Court in a case against 70% increase in taxes on liquor said economic activities were severely hit owing to the Covid-19 lockdown and the revenue – that primarily comes from Value-Added Tax/Goods and Service Tax collection, state excise and stamp duty – had gone down by almost 90% to Rs 300 crore in April.
On May 31, the Delhi government asked the Centre to release Rs 5,000 crore so that it could pay the salaries of its employees. Deputy Chief Minister Manish Sisodia said the Delhi government did not get anything from the disaster relief fund that was provided to other states.