NEW DELHI: The government on Sunday indicated that it had the required support from states and Union Territories to push through its GST compensation formula, after Congress-ruled Puducherry backed the Centre’s plan to arrange funds via the RBI for meeting the collection shortfall due to implementation issues.
Puducherry CM V Narayanasamy was part of the group of opposition-ruled states and UTs that protested against the Centre’s proposal, which seeks to allow borrowings of around Rs 97,000 crore, against an estimated shortfall of over Rs 2.3 crore between April 2020 and January 2021, and had rejected the plan at a press conference organised by the Congress.
The borrowings, including the interest burden, are to be paid through the cess that is levied on luxury and sin goods such as cars, soft drinks and tobacco, which is to be proposed beyond the current deadline of June 2022. Under the second option, the entire shortfall of Rs 2.3 lakh crore will be met via market borrowings but the interest cost will have to be borne by the states. Currently, no state has gone for the second option, with Manipur also going for the first option.
Apart from Puducherry, others that opposed the proposal but were yet to give their preference were Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal, government sources said.
But with 21 states and UTs responding, finance ministry sources indicated the law allowed a proposal to be ratified if 20 members of the all-powerful GST Council voted on an issue. The statement is seen as a nudge to other states to respond to the proposals or face the prospect of waiting till mid-2022 to get the compensation.
“It is clear from the present situation, that if other states do not submit their options before the due GST Council meet on October 5, 2020, then they will have to wait till June 2022 to get their compensation dues, subject to the condition that the GST Council extends the cess collection period beyond 2022,” said an official. At the time of implementing GST, states were promised five-year compensation in case their collection grew at under 14% annually.
Due to Covid-19, almost all states are expected to see a shortfall and stare at a fiscal crisis as GST is the main source of revenue.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here