42nd Meeting of Goods and Services Tax (GST) Council:
The 42nd meeting of the Goods and Services Tax (GST) Council has started. Compensation cess is being watched by everyone in video conferencing. There is a deadlock between some states and the central government in this issue. A meeting is being chaired by Finance Minister Nirmala Sitharaman. A total of 21 states, including BJP-ruled states, have supported the central government on the issue of GST compensation. These states had time till mid-September to choose the option of borrowing Rs 97 thousand crore to compensate for the reduction in GST revenue in the current financial year. Non-BJP states such as Kerala, West Bengal and Punjab have categorically rejected this suggestion. Apart from compensating the states, other issues are likely to be discussed in the meeting this time. In the meeting of GST Council, states can be decided on many other issues besides compensation.
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2.35 lakh crore decline in revenue!
In the last GST Council meeting held on August 27, a shortfall of Rs 2.35 lakh crore was estimated in GST revenue in the current financial year. According to the calculation of the central government, the implementation of GST is responsible for a reduction of just Rs 97 thousand crore, while the remaining Rs 1.38 lakh crore is due to COVID-19. To compensate for the decline in this revenue, the Center gave two options. Under the first option, states can take a loan of Rs 97,000 crore from RBI under a special window. Under the second option, the Center should borrow Rs. 2.35 lakh crore from the market and give it to the states.
According to the information, 21 states have agreed to borrow 97 thousand crore rupees. Most of these states have a government of BJP or its allies. Non-BJP states are opposing this option.
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These states are in protest
Non-BJP ruled states have come face to face with the central government over the reduction in GST revenue. Chief Ministers of six such states West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu have written letters opposing the option offered by the central government. These states want the central government to take a loan to compensate for the reduction in GST revenue, while the central government argues that it cannot take a loan in lieu of taxes which do not belong to its account.
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Government has used the amount of cess
States have been facing difficulties in paying compensation since August 2019, when there was a decline in the cess. After this, the central government had to use the amount of cess deposited in 2017-18 and 2018-19 to pay compensation. The Central Government has released Rs 1.65 lakh crore as compensation for 2019-20, while the cess collection during this period has been just Rs 95,444 crore. Earlier, the amount of compensation in 2017-18 and 2018-19 has been Rs 41,146 crore and Rs 69,275 crore respectively.
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Source: www.financialexpress.com
