Finally ‘Borrow’ Option Selected by 21 States for GST Compensation Dues

21 states have chosen the borrowing option from the centre to fill the shortfall of GST in between the coronavirus pandemic. This is called option 1 in which these states will be allowed to borrow the amount estimated Rs 97,000 crore through issuing the debt under the special window done through the finance ministry. The state Puducherry is the only state which has taken a conclusion in choosing an option, references said, totalling no other Congress or opposition-ruled states possess declaration of such decisions.

Due to the coronavirus the shortfall is to be filled by taking another option 2 which the states can borrow for filling their compensation losses.

The states must have to provide their selection from option 1 and 2 before any other plan of GST officials on October 5 and if not then they will have to stand by until June 2022 for getting their dues only on the condition that collection of cess by GST council Get to know about GST (Goods and Services Tax) council 1st to 41st meeting updates and decisions taken by members. We have covered 1st meeting to last meeting decisions. Read more extends beyond 2022. A highest decision-maker GST administrator has the only body to make the decisions in national tax united in July 2017.

“It may be noted that the 41st GST Council meeting Get all updates of the GST Council 41st Meeting regarding states’ compensation. The meeting was held via video conferencing with states’ finance ministers. Read more took place in the backdrop of the opinion of the Attorney General for India on the compensation cess issue where he has opined that there is no obligation on the centre under the GST laws to compensate for the loss of revenue,”
“It is the GST Council and not the central government which has to find ways, according to the Attorney General, to meet the compensation shortfall. Also, a state can borrow, even on the strength of future receipts from the compensation fund,” the person said. Congress is the only party who held delay in paying the GST compensation with the sovereign default who gives the constitutional guarantee which becomes the reason that the states stand on board with the GST plan.

As to the states the centre is in pressure for giving the compensation to those who have not earned yet due to Covid-19 the biggest example is Punjab who has revenue deficit Rs 25,000 crore in the current year.

The GST collection before the times of coronavirus was already lower even before the coronavirus pandemic which makes it harder for the centre to compensate for the states.