Compensation losses under the GST regime
Some states don’t want any strings attached to borrowing while meeting the payment conditions.
The Center‘s concrete measures for taking loans to satisfy the shortfall of compensation under the products and Services Tax (GST) regime have still not been found to be fully favored with the states, with a replacement front opening where they enforce further clarification Giving and a no-strings are attached lending mechanism.
States like Punjab, Chhattisgarh, and Kerala to destroy their compensation share with payment of interest and principal before approving the dues to incorporate the number of compensation losses beyond the proposed borrowing of Rs 1.10 lakh crore. Have said Within the scope of back-to-back lending mechanisms.
A letter has been written to Punjab Chief Minister Amarinder Singh by Union minister of finance Nirmala Sitharaman, stating that there’s no clarity on the ratio, including compensation cess after June 2022 between repayment of principal borrowed by the middle and states. Are going to be passed. And arrears that states are to be borrowed.
The letter states, “Ideally, the cess should be used first to pay the arrears and thereafter interest and every one principal.”
Singh said that states’ suggestions like payment of full compensation and dispute resolution mechanisms were ignored and therefore the way the ultimate resolution was implemented “left an impact that begging states for further compensation and taking legal measures” Be left to be unable ”.
He involved destroying the extra 0.5 percent borrowing space (to provide those states that opt for option no matter whether or not they allow all states to settle on one.
Chhattisgarh is additionally getting to reply to a letter sent by the middle of last week, which proposed to incorporate the balance compensation deficit amount under an equivalent back-to-back loan arrangement. Chhattisgarh’s Commercial Tax Minister TS Singh Deo said that if states are asked to borrow the remainder of the compensation deficit at quite Rs 1.1 lakh crore, then the interest liability will fall on the states, rather than it within the proposed lending mechanism should be included.
“The balance of compensation losses of over Rs 1.10 lakh crore will eventually be paid from the cess pool of compensation. If they assert that the middle is taking a loan and it’ll be adjusted, then we’ve no problem. But if they assert that states are going to be allowed to require loans, but states will need to pay interest. A back-to-back loan is that the correct procedure, it provides for payment of principal and interest from the cess account. The balance should even be brought under this mechanism, ”he said, adding that the compensation deficit estimates for this financial year should now get on actual revenue instead of unplanned estimates.
Kerala had said last week that the whole compensation shortfall should be met this year and no amount should be deferred, while Jharkhand rejected the Center’s proposal.
The Finance Ministry on Thursday said that the middle was asked to require loans from the market then work as an intermediary to pay the GST compensation shortfall of Rs 1.1 lakh crore to the state. Governments. This arrangement wouldn’t reflect the fiscal deficit of the middle and would seem as capital receipts for state governments.
The total GST revenue shortfall for the present fiscal year was estimated at Rs 3 lakh crore, with the gathering of cess estimated at Rs 65,000 crore, causing a compensation deficit of Rs 2.35 lakh crore. Out of Rs 2.35 lakh crore, a discount of Rs 1.1 lakh crore has been estimated thanks to GST implementation, while the remaining amount is being estimated because of the impact of the covid-19 epidemic.
In August, the middle gave states two options – either borrow Rs 97,000 crore through a special window facilitated by RBI or borrow Rs 2.35 lakh crore from the market.
Mumbai: GST Portal developed technical glitches on Tuesday, the Judgment Day of filing GSTR-3B summary returns for September. This also comes before the October 31 deadline for annual GST returns for 2018-19.