SRINAGAR: Jammu and Kashmir has received more than Rs 14,000 crore in GST compensation over five financial years, the Union Finance Ministry informed the Lok Sabha on Monday, placing the Union Territory among the significant beneficiaries of the compensation mechanism that operated from 2017-18 to 2022-23. The government said that the figures were part of a wider national disbursal aimed at protecting states and Union Territories from revenue shortfalls after the introduction of GST.
According to the Ministry’s reply, Jammu and Kashmir received a cumulative Rs 14,427 crore in compensation across the period, beginning with Rs 1,053 crore in 2017-18 and rising to over Rs 4,000 crore annually in the later years. According to the figures presented, the compensation released year-wise to Jammu and Kashmir was Rs 1,053 crore in fiscal 2017-18, Rs 1,599 crore in 2018-19, Rs 3,115 crore in 2019-20, Rs 4,242 crore in 2020-21, Rs 3,929 crore in 2021-22 and Rs 489 crore in 2022-23The disclosure came during a response to a series of questions on GST compensation, direct tax trends and ongoing simplification efforts under both direct and indirect taxes.
Nationally, the Centre said it had released Rs 4.95 lakh crore in GST compensation to all states and Union Territories over the same period. Large industrial states such as Maharashtra, Karnataka and Gujarat constituted the biggest recipients, each drawing between Rs 80,000 crore and Rs 1.2 lakh crore. Delhi, Tamil Nadu, Punjab and Uttar Pradesh also featured high on the list. Northeastern states and smaller Union Territories, which either did not register revenue gaps or had minimal collections, received little or no compensation.
The Finance Ministry told the House that GST compensation has now completed its constitutionally mandated cycle, and that the broader structure of the tax is undergoing changes following the GST Council’s September 2025 meeting, which recommended a comprehensive rate rationalisation and structural simplification of the regime. These recommendations were notified by the Central Government from September 22, 2025.
The government said it has moved to streamline refunds by introducing a risk-based provisional refund system under which low-risk applicants can receive ninety per cent of eligible refunds upfront. The facility, earlier confined to zero-rated supplies, has now been extended to inverted duty structure cases as a temporary trade facilitation measure. Refunds are fully electronic, and specific categories of taxpayers not eligible for provisional refunds have also been notified.
The reply added that an optional simplified GST registration scheme has been introduced, providing automatic registration within three working days for low-risk applicants and those with expected tax liability below Rs 2.5 lakh per month on supplies to registered entities. Rules relating to post-sale discounts have been amended to remove procedural burdens such as pre-agreed documentation and invoice-linking requirements. A clarificatory circular has also been issued to prevent disputes arising from such discount arrangements.
The Ministry said that several compliance relaxations continue to benefit small businesses. Thresholds for GST registration and composition have been raised, quarterly return filing for small taxpayers is now available through the QRMP scheme, and the facility to file NIL returns via SMS has been operationalised. Taxpayers with turnover up to Rs 2 crore are exempt from annual return filing, while additional payment modes including UPI, credit cards and IMPS have been enabled. The requirement of compulsory registration for small sellers supplying through e-commerce operators has been waived, and input tax credit timelines for the initial years of GST have been retrospectively extended.
On direct taxes, the government highlighted changes to reduce compliance burden by raising thresholds for tax audits and expanding the scope of presumptive taxation under sections 44AD and 44ADA. It said that analytics, third-party data and artificial intelligence are being increasingly used to detect evasion and broaden the tax base while simplifying procedures for honest taxpayers.
The House was also informed that direct tax collections have risen steadily over the past decade, increasing from Rs 6.3 lakh crore in 2013-14 to a provisional Rs 22.26 lakh crore in 2024-25, reflecting both economic expansion and improved compliance systems.
The Ministry said that the combined reforms in direct and indirect taxes are aimed at widening the tax base, reducing distortions and making compliance smoother for small enterprises, even as states such as Jammu and Kashmir continue to benefit from past compensation mechanisms designed to stabilise their revenues during the transition to GST.
