News and Updates on 41st GST Council Meeting
Finance Minister Nirmala Sitharaman has chaired the five hours long 41st GST council meeting via video conferencing on 27th August 2020.
Sh. Anurag Thakur (Minister of state for finance), finance ministers of states & UT’s and senior officers from both union and state governments were also present in the meeting.
Entire meeting was revolved around the issue of revenue shortfall in GST and compensation to the states. A loud uproar by opposition ruled states was also observed during the meeting.
Here are the key highlights of :-
- GST shortfall in FY21 is expected to be around Rs 2.35 lakh crore and Shortfall in compensation due to implementation of GST has been estimated to be Rs 97,000 crore.
Two options were placed before states for GST compensation.
- Option 1 – Borrow 97,000 crore from RBI.
- Option 2 – Borrow entire shortfall of 2, 35,000 crore from RBI.
Finance minister has said -If a state goes for Option 1, it will borrow less, but its compensation entitlement will be protected. So, choice is between
- Borrowing less & getting cess later,
- Borrow more & pay for it using cess collected during the transition period.
Repayment of loans, including interest payments, will be made through the cess collected from 6th year onwards; in no case will the states be burdened as they will not have to tap into other sources of revenue for loan repayment.
- States were given seven working days to decide the option.
- These options will be available only during current year. The situation will be reviewed next year in April and decision made on what is best for the country.
- The GST Council agreed that this is not the appropriate time to talk of increases in tax rates.
- A brief council meeting to be held after few days.
More details can be read at :- States given two options on compensation: Highlights of GST Council meeting