NEW DELHI: Even after the eight hours long meeting of the GST council, the stalemate over the mode of the pending GST compensation transfers between the Centre and states continued and the council will meet again on October 12 to resolve the issue.
However states can get some immediate relief as the centre has decided to disburse the total cess collected so far this year, which is Rs 20,000 crore, by Monday night itself, Finance Minister Nirmala Sitharaman announced in a media briefing after the 42nd GST a media briefing.
During the last GST meeting on August 27, that States were given two options on compensation.
The first option was provision of a special window in consultation with the Reserve Bank of India to provide Rs 97,000 crore at a nominal interest rate, and the second was for the States to bear the entire gap in revenue shortfall of Rs 2.35 lakh crore.
So far 21 states have agreed for the first option, while ten states, mostly opposition ruled states, have demanded that it is the centre which should borrow funds and pay states their complete dues. They have also written to the Prime Minister in this regard.
“The question was that 20 states have chosen an option but some have not chosen any. The argument of those who had not chosen any option was that the Centre should borrow. At the end of day, it was felt the GST Council can’t decide on the basis of the opinion of 20 states, we need to talk further. I was gently reminded that I cannot take anyone for granted. I don't take anybody for granted,” Sitharaman said, adding that no state will be denied their dues even if a consensus is not reached on October 12.
Clearing the discrepancies over the IGST compensation, the finance minister also announced that states which received IGST amount less than their fair share, totaling Rs 24,000 crore will also receive it by the end of next week and the states which ended up getting more will not be asked to return the extra amount immediately, but will have to do it eventually and gradually.
The panel also decided to extend using GST cess collections to compensate states beyond previously agreed June 2022 timeframe.
In some relief to small businesses, it was decided that from Jan. 1, taxpayers with less than Rs 5 crore annual turnover will not be required to file monthly GSTR-1 and GSTR-3B returns and they can file it now on a quarterly basis.
On other hand, to check misuse of tax refunds, the council also announced that GST refunds will be given only in bank accounts which are validated with PAN and Aadhaar details from January 1.
And while the council also decided to keep the GST rates unchanged for the time being, it exempted satellite launch services from the 18 per cent GST charged on it earlier.
Key decisions:
This year’s compensation cess of Rs 20,000 crore to be disbursed to states on Monday night.
Pending IGST of Rs 24,000 crore to be transferred to states by the next week.
Compensation cess to be extended beyond the original deadline of June 2022.