Over Rs, 1.5 lakh crore as GST compensation is pending towards states for the period April-July, 2020, as the cess collected in the current financial year was insufficient to pay the dues.
GST compensation issue, The centre in the previous GST Council meeting had offered two borrowing options to the states. As many as 21 states/UT have backed the first option, entailing Rs. 97,000 crore borrowing.
Any state that does not choose one of the options offered by the centre before the due GST council meet. They have to wait till June 2022 to get compensation for the revenue loss on account of GST transition, a senior government official said.
The centre had offered two borrowing options to the states at a specially convened Council meeting on August 27.
In the first option, the borrowing amount is equivalent to revenue loss estimated on account of GST transition that can be borrowed from a special central bank facility.
Principle and interest in the first option is to be serviced by the compensation cess. In the second option, states will have to borrow Rs 2.73 lakh crore, entailing revenue loss due to GST transition as also Covid-19 induced slowdown, from the market, facilitated by the centre and RBI. However, the states would have to bear the interest burden.
As many as 21 states have backed the first option, entailing Rs. 97,000 crore borrowing, more than the requisite number needed to pass a resolution in the GST Council if it is put to vote. This is bound to put pressure on the Opposition-ruled states, which have rejected both the options.
GST compensation issue, Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand and Uttar Pradesh have opted for borrowing Rs 97,000 crore, the official said. Manipur, which had earlier chosen the second option of borrowing Rs 2.35 lakh crore, changed its preference to the first option.
While opposition-led states of Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal have rejected both options, and have sought the Prime Minister’s intervention.
Over Rs, 1.5 lakh crore as GST compensation is pending towards states for the period April-July, 2020, as the cess collected in the current financial year was insufficient to pay the dues.
Source: States that don’t choose one of Centre’s borrowing options may not get GST dues till June 2022
Knowledge Source:
Goods & Services Tax (GST) Returns
How to File GST Return Online in India?