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Compensation cess to be extended from June 2022 Discuss in 42nd meeting of GST

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Compensation cess to be extended from June 2022 Discuss in 42nd meeting of GST

Compensation cess

Compensation cess to be extended from June 2022 Discuss in 42nd meeting of GST

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It had been decided earlier that this compensation cess is going to be charged for less than five years after the implementation of GST. Consistent with the Economic Times news, this cess is going to be expanded by the year 2024 and can be reviewed from time to time.

2.35 lakh crore decrease in revenue
It is noteworthy that within the current fiscal year, the revenue from the GST to the states may come down by Rs 2.35 lakh crore. Consistent with the calculation of the Central Government, the implementation of GST is liable for a discount of just Rs 97 thousand crore, while the remaining Rs 1.38 lakh crore is thanks to Covid-19.

Two options got to the states
The central government gave two options to the states in August. Under this, the states can either borrow loans of Rs 97 thousand crore with special facility provided by the Federal Reserve Bank or can borrow Rs 2.35 lakh crore from the market.

These states protested
Chief Ministers of six states – West Bengal, Kerala, Delhi, Telangana, Chhattisgarh, and Tamil Nadu – wrote letters opposing the choice offered by the central government. These states want the central government to require a loan to catch up on the reduction in GST revenue, while the central government argues that it cannot raise the debt on account of taxes that aren’t in its account.

States face difficulty in paying compensation
States are facing difficulties in paying compensation since August 2019 when the reduction in cess reduction. The central government has subsequently had to use the cess amount deposited in 2017-18 and 2018-19 to pay compensation. The central government has released Rs 1.65 lakh crore as compensation for 2019-20, while the cess collection during this era has been just Rs 95,444 crore. Earlier, the quantity of compensation in 2017-18 and 2018-19 has been Rs 41,146 crore and Rs 69,275 crore respectively.

The meeting of the products and Services Tax (GST) Council is scheduled to be persisted Monday, October 5. As of now, non-BJP ruled states still afflict the middle on the difficulty of compensation. A complete of 21 states, including BJP-ruled states, have supported the central government on the difficulty of GST compensation. These states had time until mid-September to choose borrowing Rs 97,000 crore to form up for the reduction in GST revenue within the current fiscal year. However, states ruled by opposition parties like West Bengal, Punjab, and Kerala haven’t yet opted for the choice given by the central government to boost debt.

Seeking alternative arrangement for GST compensation
Sources say that within the 42nd meeting of the GST Council to be persisted on October 5, states ruled by opposition parties may oppose the choice of the middle. These states may demand alternative arrangements for GST compensation. These states believe that it’s the constitutional obligation of the central government to catch up on the decrease in revenue of the states. It’s noteworthy that within the current fiscal year, the revenue from the GST to the states may come down by Rs 2.35 lakh crore. Consistent with the calculations of the Central Government, the implementation of GST is liable for the reduction of just Rs 97 thousand crores, while the remaining Rs 1.38 lakh crore is thanks to Covid-19.

In August, the central government gave two options to the states
The central government gave two options to the states in August. Under this, states can either borrow loans of Rs 97 thousand crores with special facility provided by the Federal Reserve Bank or can borrow Rs 2.35 lakh crore from the market. Non-BJP ruled states have come face to face with the central government over the reduction in GST revenue. Chief Ministers of six such states West Bengal, Kerala, Delhi, Telangana, Chhattisgarh, and Tamil Nadu have written letters opposing the choice offered by the central government. These states want the central government to require a loan to catch up on the reduction in GST revenue, while the central government argues that it cannot raise the debt on account of taxes that aren’t in its account.

States are facing difficulties in paying compensation since August 2019 when the reduction in cess reduction. The central government has subsequently had to use the cess amount deposited in 2017-18 and 2018-19 to pay compensation. The central government has released Rs 1.65 lakh crore as compensation for 2019-20, while the cess collection during this era has been just Rs 95,444 crore. Earlier, the quantity of compensation in 2017-18 and 2018-19 has been Rs 41,146 crore and Rs 69,275 crore respectively.

 

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Anurag Srivastva
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