Centre committed to paying GST compensation, says Finance Minister

New Delhi: Finance Minister Nirmala Sitharaman on Monday assured the Parliament that the government is committed to paying GST compensation to states.

Replying to a slew of questions by MPs cutting across party lines during Question Hour in Lok Sabha, she said: "Since its inception five years ago, (GST) compensation has been expected to be provided, which we are committed to and have been doing continuously."

"If I were to go by month, the last month was June, when compensation had to be given. Of the June amount, nearly half has already been paid. Therefore, for the other half, we are waiting for adequate collection to happen because it has to be given from the compensation cess, which goes into a public account, from where it is given.

"Half of the compensation that needs to be paid was released in June," she told members, who sought to know as to by when the Centre will pay the pending GST compensation amount to states.

The questions were posed by Congress member Nakul Nath and BJD's Bhartruhari Mehtab.

"There was no more money available for me to release the rest of the half. Otherwise, there is nothing pending for me to give in the sense that all that has been collected has been disbursed. But the GST compensation has already been extended till 2026 to pay for the loans that were taken, back-to-back to the states," Sitharaman said.

"In order to pay for that repayment, that is, for the loan taken and the interest thereon, to service it, the period was extended for a period of five years, but for the borrowed amount, it was extended till 2026 already," she added.