Digging deeper: On GST payment

4 months into FY2020-21, the Centre has finally managed to pay States the payment due to them for the previous year under the GST routine. This might come as a breather for States looking for to fund efforts to increase public health-care capability and contain COVID-19’s harmful impacts on susceptible sections. The last instalment of13,806 crore for March 2020 was paid out recently, taking the total payments for the year to 1,65,302 crore. To refresh, States were guaranteed compensation from the Centre for the first five years of the brand-new indirect tax program presented in July 2017, for the incomes they lost after the shift from the earlier system where States had the power to levy some indirect taxes on economic activity. This settlement assumed a 14%yearly development rate in a State’s revenue, with 2015-16 as the base year, and was to be paid from a settlement cess imposed on top of the defined GST rate on luxury and sin items. With development down over the previous fisca