GST Deadlock Continues, Centre Says It’s Releasing Rs 20,000 Crore

New Delhi:

GST compensation on account of state governments for this yr – round Rs 20,000 crore – shall be launched, Finance Minister Nirmala Sitharaman had mentioned on Monday evening after a marathon assembly of the forty second GST Council.

The Council, nevertheless, failed to supply a consensus on mode of compensation of whole compensation – round Rs 97,000 crore (rising to Rs 2.35 lakh crore together with Covid-related aid). A choice on this matter has been deferred until the subsequent assembly on October 12.

The GST Council did, nevertheless, lengthen the cess for one more 5 years. The surcharge on luxurious merchandise, which is a part of the GST, had been on account of expire in 2022.

GST compensation has emerged as a sore level with state and union territory governments this yr, significantly with the adversarial financial affect of the Covid pandemic and lockdown.

The centre is discovering it troublesome to pay states compensation – due if a state’s income grows slower than 14 per cent – as a result of states haven’t earned a lot this yr on account of months of lockdown necessitated by the COVID-19 disaster.

The Congress had referred to as the delay in paying GST compensation a “sovereign default” and going again on constitutional ensures that have been the explanation states got here on board with the GST regime. A number of opposition-ruled states, together with Bengal and Kerala, have been equally upset.

After a gathering of the GST Council earlier this yr, state and UT governments have been requested to borrow – both the complete quantity of Rs 2.35 lakh crore (which included Covid aid) or Rs 97,000 crore (which was solely GST compensation).

Tonight’s assembly was the primary because the centre put ahead its borrowing proposal.

Thus far 21 states have agreed to borrow, with 10 opposition-ruled states refusing to take action.

These states, which embody Kerala and Bengal, have written to Prime Minister Narendra Modi, reminding him of his authorities’s “constitutional” tasks on this stand-off.

The states opposing borrowing as a way of compensation have additionally identified that this locations an additional burden on their funds at an already troublesome time. The centre, they mentioned, may take up this burden and pay again the mortgage by carrying ahead GST cess assortment previous 2022.