The much awaited 41st meeting of the GST Council, headed by Finance Minister Nirmala Sitharaman and comprising state counterparts, was held today via video conferencing. This was the second meeting of the GST Council since India has faced COVID-19 pandemic and it lasted for around 5 hours.
In the press briefing by the Finance Minister held subsequent to the meeting, it was informed that the Attorney General had opined the Centre that compensation can be paid only through cess fund and not through Consolidated Fund of India.
The compensation gap for current fiscal is expected to be Rs 3 lac crore against which the cess collection is expected to be Rs 65,000 Cr. Thus there will be gap of Rs 2,35,000 Cr.
It was also intimated that considering the fall the cess collection the GST Council can also propose for levy of cess beyond 5 years. Also there can be proposal for hike in cess rates although FM stated that in todays meeting no discussion for hike in compensation cess rates were held as it may not be the time to talk about rate increases.
Two options were discussed in today’s meeting in regard to the funding of the above gap.
Option 1: Out of above gap of Rs 2.35 lac Crore , gap of Rs 97,000 cr. is towards implementation of GST (rest due to COVID-19) and it was discussed that this sum can be provided through RBI (Central Govt. to facilitate) at reasonable rate of interest (G-sec linked) to all States and repaid afterwards.
Option 2: The complete amount of gap of Rs 2.35 lac crore can be provided through RBI (Central Govt. to facilitate) at reasonable rate of interest (G-sec linked) to all States and repaid afterwards.
It was stated that States will not be burdened in above options.
The Centre also stated that the above options will only be provided only in the current year and position will be reviewed in the next year.
The States during the meeting stated that they require detailed note on both the options and they require 7 days for examining it and will get back thereafter.
During the briefing the Hon’ble FM stated that they will be sending the desired note to all the States by today or tommorow.
It is expected that after obtaining of responses of the State , another GST Council meeting can be held to conclude the issue.
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Nice briefing of meeting…