Now, Jharkhand Also Chooses Centre’s Option on GST Compensation

All states and eligible Union Territories have now opted for the special borrowing window option.

2 min read
A special borrowing window has been put in place by the Government of India for the amount of shortfall arising out of GST implementation.

With Jharkhand communicating its acceptance of Option-1 to meet the revenue shortfall arising out of GST implementation, all states have agreed the Centre's primary suggested formula on compensation settlement. The number of states who have favoured Option-1 has gone up to 28.

All the three union territories with Legislative Assemblies and are therefore part of the GST Council have already chosen the same option: of a special borrowing window window for Goods and Services Tax compensation.

The states & union territories who choose Option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the Government of India.  

The window has been operationalised since 23 October 2020 and the government has already borrowed an amount of Rs 30,000 crore on behalf of the states in five instalments and passed it on to the states and union territories, who chose Option-1.

Like other states, Jharkhand will also receive funds raised through the window from the next round of borrowing on 7 December, reported Business Standard, adding that the Centre will borrow Rs 6,000 crore for all states and the three UTs.


Under the terms of Option-1, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the states are also entitled to get unconditional permission to borrow the final instalment of 0.50 percent of Gross State Domestic Product (GSDP) out of the 2 percent additional borrowings permitted by the government, under the Atmanirbhar Abhiyaan programme from 17 May 2020.

This is over and above the special window of Rs 1.1 lakh crore. Jharkhand has been been allowed to borrow an additional amount of Rs 1,765 crore, the Business Standard report said.

(With inputs from IANS, Business Standard)

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