GST 41st Council Meeting Highlights

GST 41st Council Meeting Highlights:

The Goods and Services Tax (GST) Council met on Wednesday to discuss on compensating states for revenue shortfall. Finance Minister Nirmala Sitharaman chaired the 41st meeting of the GST council on Thursday via video conferencing. Union minister of state for finance and corporate affairs Anurag Thakur and finance ministers of all the states and union territories are present in GST Council meet.

Under the Central Goods and Services Tax Act, states were guaranteed payment for any loss of revenue in the first five years of GST implementation from July 1, 2017.

FM Nirmala Sitharaman said that centre can facilitate borrowings from RBI but the loans will be in the name of states. FM Sitharaman said that two options were placed before states, including the option that centre will facilitate talking with RBI and help to get G-security linked interest rates so that each state does not have to struggle for loans. She added that the states have requested the government to lay down both options in detail, and give them 7 full working days to deliberate on it and get back.

Two Options of Compensating States Discussed: Nirmala Sitharaman

Two options of compensating states were discussed during the five-hour-long meeting of the GST Council.

Option 1: To provide a special window to states, in consultation with RBI, to provide the Rs 97,000 crore at a reasonable rate of interest; this money can then be repaid after five years from the collection of cess.

Option 2: Entire GST compensation gap of Rs 235,000 crore of this year can be met by the states, in consultation with RBI.

The states have asked to give them seven working days to think about the options, and the options will be available only during the current year. The government may have another GST Council meeting soon.

Act Of God May Result In Economic Contraction This Fiscal Year: Finance Minister

Once an arrangement is agreed upon by the GST Council, the government can proceed fast and clear these dues, and also take care of the rest of the financial year. These options will be available only for this year, in April 2021, and the GST Council will review and decide on the action for the fifth year.

Compensation Gap Also Risen Due To COVID-19: Finance Secretary

The gap in compensation to states, expected at ₹ 2.35 lakh crore, has risen this year due to the coronavirus pandemic as well, the Finance Secretary said. The shortfall due to the implementation of GST is estimated at ₹ 97,000 crore. The GST shortfall in fiscal year 2020-21 is at ₹ 2.35 lakh crore, of which only ₹ 97,000 crore is due to the implementation of GST, and the rest due to COVID-19.

GST Collection Severely Impacted This Year Due To COVID-19: Finance Secretary

Collection of Goods and Services Tax has been severely impacted this year due to the coronavirus pandemic. The Centre released over ₹ 1.65 lakh crore as GST compensation to states for financial year 2019-20, which included ₹ 13,806 crore for the month of March.

Tags: GST, GST Council Meeting Updates, News

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