After a day-long deliberation at the GST Council's virtual conference today, Rs 20,000 crore compensation cess would be disbursed to states. In the current fiscal, the states are staring at a staggering Rs 2.35 lakh crore Goods and Services Tax (GST) revenue shortfall, Finance Minister Nirmala Sitharaman said on Monday.
Briefing reporters after a marathon meeting of the panel, the Finance Minister said at the 42nd Council Meet that the states and centre have decided to meet again on October 12 to further plan on states' GST compensation
Sitharaman said that 21 states had opted for one of the two options the Centre had previously suggested for borrowing to meet the shortfall in GST collections. "However, some states did not opt for any of the two options, and the Council decided for more deliberations," she said.
Of the Rs 2.35 lakh crore shortfall, as per Centre's calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is the impact of COVID-19 on states' revenues.
The GST Council has also decided to extend compensation cess beyond June 2022, the finance minister added.
She said that the GST Council has also taken up the long-pending issue of Integrated Goods and Services Tax. Earlier there was no formula for devolution of Integrated Goods and Services Tax (IGST), which had resulted in several anomalies in its distribution, she said. A committee under the chairmanship of Bihar Deputy Chief Minister Sushil Modi has been formed to settle the issue of IGST.
Finance Secretary Ajay Bhushan Pandey said that the panel besides easing compliance burden of small taxpayers also exempted satellite launch services by ISRO and Antrix.
In the past
The Centre in August had given two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from market.
It had also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing. The non-BJP ruled states are at loggerheads with the Centre over the issue of funding the shortfall.
(With inputs from PTI and ANI)