In a move designed to provide financial relief during the Covid-19 pandemic, the federal tax body under Finance Minister Nirmala Sitharaman's is to pay state governments compensation of $2.73 billion.
Addressing a press conference after a marathon meeting of the Goods and Service Tax (GST) Council, Sitharaman said: "Whatever has been collected in the form of compensation will be distributed to the states tonight. State governments will be paid $2.73 billion.”
The council also discussed the issue of state governments raising debt to meet the compensation gap.
Since the central government has not paid the requisite compensation to the states since April, due to Covid, it has now offered them help in raising debt to meet the gap. No final decision has yet been taken on the debt issue.