Categories: Business

Stormy GST Council meet in offing; revenue shortfall, compensation to be discussed. GST Council meeting to be held today, to be discussed on commotion, loss of revenue and compensation to states

Photo: GST COUNCIL

Stormy GST Council meet in offing; revenue shortfall, compensation to be discussed

new Delhi. The meeting of the GST Council on Thursday may be ruckus. Non-BJP ruled states are fully united to pressurize the Center to give compensation as promised, to compensate for the loss in revenue due to the introduction of Goods and Services Tax (GST). According to sources, the 41st meeting of the GST Council will take place through video conferencing. The sole agenda of the meeting is to compensate for the decrease in revenue of the states. Options that may be considered at the meeting include debt from the market, an increase in the rate of cess or an increase in the number of items that fall under the compensation cess.

Sources said that the reverse duty structure on certain products such as textiles and slippers, ie fixation of taxation on raw materials at a higher rate than finished products, is also likely to be discussed. The Kovid-19 crisis has increased the financial problems of the states. Prior to the meeting, the Chief Ministers of the states of the opposition parties met in a digital manner on Wednesday to formulate a common strategy in the matter. Congress President Sonia Gandhi has given a hint of what the atmosphere will be like in the GST Council meeting. In the meeting of the Chief Ministers of the opposition parties, he alleged on Wednesday that the refusal by the Narendra Modi government to give compensation related to the Goods and Services Tax is deceit with the states and the public.

The meeting was attended by Rajasthan Chief Minister Ashok Gehlot, Punjab Chief Minister Amarinder Singh, West Bengal Chief Minister Mamata Banerjee, Maharashtra Chief Minister Uddhav Thackeray, Jharkhand Chief Minister Hemant Soren, Chhattisgarh Chief Minister Bhupesh Baghel and Puducherry Chief Minister V Narayanasamy. Gandhi said in the meeting that we have to work together and fight against the central government. States like Kerala, Punjab and Bihar have already said that if the revenue loses anything to the states for five years after the GST is implemented, the Center is morally bound to make up for it. Earlier, Attorney General KK Venugopal had said that the Center is not legally obligated to meet any shortfall in GST revenue to the states.

Sources had earlier said that following Venugopal's opinion, states may have to consider taking loans from the market to compensate for the revenue. The GST Council will take a final decision in this regard. In March, the central government had sought opinion from the Attorney General on the legality of borrowing from the market by the GST Council to meet the shortfall in the compensation fund. The Compensation Fund has been set up by levying additional charges on luxury and non-profit items. Through this, the states are compensated for any reduction in revenue by implementing GST.

Under the GST law, states have been guaranteed to meet any shortfall in revenue from the implementation of the Goods and Services Tax for the first five years. GST came into force from July 1, 2017. The shortfall is calculated by basing a 14 percent annual increase in the GST collections of states under the base year 2015-16. The GST Council has to consider how to make up for the loss of revenue in the current situation. The Center released Rs 1.65 lakh crore in GST compensation item in 2019-20. However, the amount received from collection of cess was only 95,444 crores.

This post was published on August 27, 2020 8:42 am

Content Team

Recent Posts

Ban on gaming apps hopes for opportunity for domestic sector

Photo: MEDIATEK online gaming new Delhi. The government has banned 118 apps keeping in mind the security of the country.…

India august gold imports double to hit 8 months peak says source

Photo: TIMESOFINDIA gold import at 8 months high new Delhi. The economy is now looking forward to a gradual recovery.…

Coal India Q1 profit plunges 55 percent YoY

Photo: GOOGLE Coal India Q1 result new Delhi. Coal India's profit fell 55 per cent in the first quarter to…