New Delhi | Jagran Business Desk: Finance Minister Nirmala Sitharaman on Thursday asserted that the GST collection has been severely hit by the coronavirus pandemic in the country and said that the shortfall in Financial Year 2020-21 was around 2.35 lakh crore.
After a marathon 5-hour-long GST council meet on the agenda of making up for the shortfall in states’ revenues amid the pandemic, the finance minister said the two options of compensating states were discussed at the meet.
According to the two options, the states can either pick up entire compensation by borrowing from the government or they can pick up a limited amount through a special window, in consultation with the RBI and receive the remaining amount by the end of 2022.
“Option 1 that was presented to GST Council was to provide a special window to states, in consultation with RBI to provide Rs 97,000 crores at a reasonable interest rate”, finance secretary Ajay Bhushan Pandey who attended the 41st GST Council Meet said.
“Option 2 presented to GST Council 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. These options will be sent to states for a view within 7 Days and will apply for this fiscal year only”, he added.
These options will be sent to states for a view within seven days and will apply for this fiscal year only. Pandey said that GST collection has been severely impacted this year due to COVID-19 pandemic and as per GST Compensation Law, states need to be given compensation.
Noting that Attorney General said that GST Compensation has to be paid for a transition period from July 2017 to June 2022, Pandey said the compensation gap which has arisen this year (expected to be Rs 2.35 lakh crores), was due to COVID-19 as well.
"The shortfall in compensation due to the implementation of GST has been estimated to be Rs 97,000 crores," he said.
"Repayment of loans, including interest payments, will be made through the cess collected from 6th year onwards. In no case, states will be burdened i.e they will not have to tap into other sources of revenue for loan repayment", Pandey added.
Finance Minister Nirmala Sitharaman, who chaired the meeting, said the states have asked them to give them seven working days to think about the options.
"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 the fifth year," she added.
"Govt will give a further relaxation of 0.5% in states' borrowing limit under FRBM Act as 2nd leg of Option 1. States can choose to borrow more, beyond expected compensation itself, since that is the injury caused by COVID-19", FM Nirmala Sitharaman said.
(With ANI Inputs)
Posted By: Talib Khan
