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GST Council Meet: The non-BJP governing States firmly oppos the Center's consensus!

By Priti Kumari


NEW DELHI: Through video conferencing, the 42nd meeting of GST transpired, on Monday with an agenda of mitigating the opinion difference between the Center and States regarding GST compensation. The opposition-led states rejected the Center's two options, offered to compensate the shortfall in the states' revenue due to the implementation of GST and global pandemic (present FY). The offers proposed during the August(27) meeting of GST Council -Either 'the States borrow the compensation of INR 97,000 lakh crore because of GST implementation with redemption from payment of principal and interest component which Will be levied through cess (on luxury items)' or the centre can borrow total shortfall amount of INR 2.35 lakh(originally, INR 3 lakh crore is due out of which INR 65 lakh crore will reimburse through cess collection) crore emanated due to COVID-19 with carriage of interest component.

However, the Center (BJP) ruling States nodded on the Center's first option while the 10 non- BJP ruling states such as West Bengal, Punjab & Kerala etc. spurned the proposals even after the increment in the States revenue shortfall due to GST implementation from INR 97,000 lakh crore INR 1.1 lakh crore by the Union Government in the 42nd GST Council meeting. Kerala Finance Minister T.M.Thomas Issac is of the view that "the entire shortfall needs to be compensated and it is the constitutional right of the states.The compensation cannot be linked to normal borrowing or additional borrowing limits allowed to them". He added, "10 states demand that full compensation should be paid to the states during the current year as per clauses in the law and centre should borrow. The decision was postponed to the next meeting on 12th of October".

Amid the discord, FM Nirmala Sitharaman asserted the extension of cess beyond 2022. She also declared, "This year's compensation cess collected amounting to INR 20,000 crores will be disbursed to the states tonight".While tranquilising the states' she added, "Entire compensation is going to be paid back to the states .The compensation shortfall which has arisen due to GST implementation or due to COVID 19 is all going to be given back to the states".

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