Government to Settle Rs 2.69 Lakh Crore GST Loans Early

The central government is poised to repay Rs 2.69 lakh crore loans taken for GST compensation by November 2025, four months ahead of schedule. The subject will be discussed in the next GST Council meeting. This repayment addresses the borrowing during FY21 and FY22 to compensate states for revenue losses due to COVID-19.

The central government's plan to repay Rs 2.69 lakh crore in loans taken to cover GST revenue shortfalls by November 2025, ahead of the previous March 2026 schedule, will be addressed in the upcoming GST Council meeting. This repayment addresses borrowings made during FY21 and FY22 to compensate states for revenue losses.

The compensation cess, initially imposed for five years post-GST implementation, expired in June 2022 but continues to be used for loan repayment. Karnataka raised concerns about the continuation of this cess, which will be a focal point in the Council's August meeting.

The Centre had borrowed Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 to bridge state resource gaps caused by reduced cess collection due to COVID-19.

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