GST Council Meet: Compensation Gap Estimated at Rs 2.35 Lakh Crore, Largely Due to COVID-19, Says Centre
Finance Secretary Ajay Bhushan Pandey told the representatives of the states, at the virtual meeting, that an estimated gap of Rs 97,000 crore is due to the implementation of GST. The remainder is caused by the lockdown which was necessitated to curb the spread of coronavirus, he added.
New Delhi, August 27: At the 41st GST Council Meeting, which came in the backdrop of apprehensions raised by several states, estimated the compensation gap at around Rs 2.35 lakh crore. The unprecedented gap was created largely due to the COVID-19 pandemic as it deteriorated tax collection, said the central government.
Finance Secretary Ajay Bhushan Pandey told the representatives of the states, at the virtual meeting, that an estimated gap of Rs 97,000 crore is due to the implementation of GST. The remainder is caused by the lockdown which was necessitated to curb the spread of coronavirus, he added. RBI Suggests to Set Up GST Council Type Authorities for Land, Labour, Power to Drive Structural Reforms.
"Compensation gap which has arisen this year (expected to be Rs 2.35 lakh crores), is 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," the Finance Secretary was reported as saying.
Update by PIB
An option tabled before the states by the Centre was to avail loan for the gap of Rs 97,000 crore from the Reserve Bank of India (RBI). The loan would be sanctioned at a reasonable rate of interest, and could be repaid over a period of five years after increasing revenue through cess collection.
The Attorney General of India, KK Venugopal, while stating that the states need to be paid their due, also noted that the Consolidated Fund of India cannot be used to meet their demands. The compensation could be granted only on the basis of cess collection, the Finance Secretary was reported as suggesting.
"The Attorney General's clear opinion was that the compensation gap cannot be met from the Consolidated Fund of India He suggested that the compensation cess levy can be extended beyond 5 years, to meet the shortfall," he said.
'Option 2' Before States
"During April-July 2020, total GST compensation to be paid is Rs 1.5 lakh crores, this is so because there was hardly any GST Collection in April and May. 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," the Revenue Secretary further explained.
Ahead of the GST Council Meeting, Chief Ministers of several non-NDA states spoke out against the delay in grant of state's due. "How will we pay salaries and run our government. Under the GST, the Centre needs to grant us our due," said Punjab CM Captain Amarinder Singh.
Maharashtra CM Uddhav Thackeray also voiced his concern in a meeting with seven non-BJP Chief Ministers on Wednesday. "We are asking for our share, we are not begging against them. At this is not only the right of government, but the right of our public," he said.
(The above story first appeared on LatestLY on Aug 27, 2020 04:57 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).