GST compensation extension unlikely

Most economists and central government officials opine that with Goods and Services Tax (GST) collections showing a healthy trend, there is no case for the extension of compensation for states as most of them will see windfall collections this year. GST collection remained above Rs.1.4 trillion for the fifth month in a row in July 2022. The timeframe for paying GST compensation to states ended on 30 June 2022. Since then, several states have been demanding an extension for the same. A government official told Business Standard that states will not face any cash flow problem once the arrears are cleared. The central government has already cleared arrears of Rs.850 billion. Including for June 2022, the arrears cleared for this year will be above Rs.1 trillion, he added.