New Delhi: The Centre has released the entire amount of Rs 86,912 crore compensation dues payable to all States, including Kerala, under the Goods and Services Tax (GST) regime. The states received the dues even as the GST compensation period was to end this month (June 2022).

The Centre releasing Kerala's dues of Rs 5,693 crore came as a relief to the state that has been reeling under severe financial constraints.

States are being compensated for the revenue shortfall resulting from subsuming their taxes such as VAT in the uniform national tax GST. States, including Kerala, have been demanding the extension of the compensation period.

Earlier most states, including Kerala, had been demanding the Centre to clear the dues. With the Centre clearing all the outstanding amount till May 31, 2022, the States would now be getting only one more — the final — installment of the dues.

In 2019-20 the Centre had transferred an excess Rs 11.40 crore as GST compensation to Kerala. This was the only time Kerala received compensation in excess since the launch of the GST regime on 1st July, 2017.

As reported by PTI earlier the cess which is currently levied on top of the GST rate on certain luxury and sin goods to fund the compensation amount for states will continue to be levied till March 2026. The collections will be used to pay off the borrowings that had to be done since 2020-21 to pay for state compensation.