The Goods and Service Tax (GST) will discuss the issue of compensation for the third time in the 43rd meeting of the Council on Monday. In this meeting chaired by Finance Minister Nirmala Sitharaman, the suggestion of non-BJP ruled states to set up a ministerial committee to build consensus on compensation can be considered. Sources gave information about this.
For the third consecutive time, the council is going to discuss compensation for the reduction in GST revenue. Some states, ruled by the opposition parties, are suggesting that a ministerial committee should be formed to form a consensus in this matter. However, the BJP-ruled states have already agreed with the Center on the option given to take loans from the BJP and they believe that they should now be allowed to move towards taking loans, so that they can get the funds available soon.
Sources said that the unilateral agenda of the 43rd meeting of the GST Council is to find a way forward on the issue of compensation. In the last meeting of the council last week, it was decided that luxury or harmful products like cars, tobacco etc. will be levied cess even after June 2022. However, there was no consensus on the issue of compensation in the said meeting.
Compensation revenue estimated to decrease by 2.35 lakh crores
In the current financial year, GST compensation revenue is expected to decrease by Rs 2.35 lakh crore. The central government has given two options to the states in August. Under the first option, there is a proposal to provide a special facility for the loan of Rs 97 thousand crores by the Reserve Bank, and under the second option, it is proposed to raise the entire Rs 2.35 lakh crore from the market. The central government says that the GST implementation is responsible for just Rs 97 thousand crore in the estimated reduction in GST compensation revenue, while the remaining decrease is due to coronavirus epidemic. After the demand of some states, the special loan system of borrowing has been increased from Rs 97 thousand crores to Rs 1.10 lakh crore under the first option.