The Goods and Services Tax (GST) collection has been severely impacted due to coronavirus pandemic this year, says Revenue Secretary after GST Council meeting on Thursday.
The Finance Minister Nirmala Sitharaman held 41st Goods and Services Tax (GST) Council meeting today.
The states were guaranteed payment for any loss of revenue in the first five years of GST implementation from July 1, 2017 under the Central Goods and Services Tax Act. However, due to the Covid-19 outbreak, the compensation cess collection have jumped.
At the meeting, two options of compensating states were discussed, including borrowing from the Reserve Bank of India (RBI).
The finance minister said that the options discussed for meeting GST shortfall are only for the current fiscal. The GST Council will look at the issue again in April next year.
The meeting was attended by Anurag Thakur, Minister of State (MoS) for Finance, finance ministers of various states and Union Territories (UT) and senior officers from the Union Government and states. After 5-hour-long meet, the GST Council held a video press conference with the media.
“GST collection has been severely impacted this year, due to Covid-19 pandemic. As per GST Compensation Law, states need to be given compensation, “ Finance Secretary said during the conference.
Here are the highlights from the video conference:
– Central government released more than Rs 1.65 lakh crore as GST compensation to states for FY 2019-20, including Rs 13,806 crore for March. Total amount of compensation released for 2019-20 is Rs 1.65 lakh crore, whereas cess amount collected was Rs 95,444 crore: Finance Secretary
– Attorney-General said that GST Compensation has to be paid for a transition period- from July 2017 to June 2022. Revenue has to be protected compensation gap to be met from cess fund, which in turn has to be funded from levy of cess: Ajay Bhushan Pandey, Finance Secretary on GST
– As mentioned by Finance Minister in GST Council meeting held in March, legal views of the matter were sought from the Attorney General of India who said that GST compensation has to be paid for transition period from July 2017 to June 2022: Finance Secretary Ajay Bhushan Pandey
– The Attorney General of India said that protected revenue has to be protected but compensation gap to be met from cess fund, which in turn has to be funded from levy of cess: Finance Secretary Ajay Bhushan Pandey
– Compensation gap which has arisen this year (expected to be Rs 2.35 lakh crores), is due to Covid-19 as well. The shortfall in compensation due to the implementation