New Delhi | Jagran Business Desk: The Centre on Thursday announced that the coronavirus pandemic has severely impacted the goods and services (GST) collection, adding that the shortfall in compensation due to the implementation of GST has been estimated to be Rs 97,000 crore.
Addressing a press briefing after the 41st GST Council meet, the central government said that the Attorney General has opined that shortfall in GST collections cannot be met from Consolidated Fund of India.
"Annual GST compensation requirement is estimated to be around Rs 3 lakh crores, and cess collection is expected to be around Rs 65,000 crores, leaving us with an annual compensation gap of Rs 2.35 lakh crores," Revenue Secretary Ajay Bhushan Pandey was quoted as saying by news agency ANI.
The Centre informed that Rs 1.5 lakh crore is due to states for April-July in GST compensation, noting that it has released more than Rs 1.65 lakh crore as GST compensation to states for FY 2019-20, including Rs 13,806 crore for March.
The Revenue Secretary also informed that "total amount of compensation released for 2019-20 is Rs 1.65 lakh crore, whereas cess amount collected was Rs 95,444 crore".
GST Council to look at issue again in April next year
Following the meeting which lasted for more than five hours, Finance Minister Nirmala Sitharaman said that the GST Council will look at issue again in April next year, adding that options discussed for meeting GST shortfall only for current fiscal.
"Act of God may result in contraction of the economy this fiscal," Sitharaman said, adding that two options of compensating states were discussed during the 41st GST council meeting.
Sitharaman informed that the states have asked us to give them seven working days to think about the options, adding that these options would be available only during the current year.
"Once the arrangement is agreed upon by GST Council, we 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, the Council will review and decide action for 5th year," news agency ANI quoted Sitharaman as saying.
Speaking about the two options, Revenue Secretary Ajay Bhushan Pandey said that option one presented to the council "was to provide a special window to states, in consultation with RBI to provide Rs 97,000 crores at a reasonable interest rate".
On the other hand, the second option "was that the entire GST compensation gap of Rs 2,35,000 crore of this year can be met by states, in consultation with RBI".
About 41st GST Council meet:
A crucial meeting of the GST Council on compensating states for revenue shortfall was held on Thursday with the states ruled by non-NDA parties opposing the Centre's move to ask states to borrow to meet the deficit.
The 41st meeting of the GST Council headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states, held deliberations via video conferencing on ways to make up for the shortfall in states' revenues.
The payment of GST compensation to states became an issue after revenues from the imposition of cess started dwindling since August 2019. The Centre had to dive into the excess cess amount collected during 2017-18 and 2018-19.
The Centre had released over Rs 1.65 lakh crore in 2019-20 as GST compensation. However, the amount of cess collected during 2019-20 was Rs 95,444 crore. The compensation payout amount was Rs 69,275 crore in 2018-19 and Rs 41,146 crore in 2017-18.
(With inputs from agencies)
Posted By: Aalok Sensharma
