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The central government cannot take a loan from the market to catch up on the reduction in GST revenue

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The central government cannot take a loan from the market to catch up on the reduction in GST revenue

GST revenue

The central government cannot take a loan from the market to catch up on the reduction in GST revenue

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Finance Minister Nirmala Sitharaman chaired the products and Services Tax (GST) Council meeting on Monday through video conferencing. Minister of State for Finance Anurag Thakur, Finance Ministers of States and Union Territories, and senior officials of Central Government and States were also present within the meeting.

Finance Minister Sitharaman gave a news conference after the meeting. Here he said that today’s meeting was an extra a part of the 42nd meeting of the GST Council, during which an item 9A was discussed. Sitharaman said that there was a discussion about taking loans and extension of cess etc. within the meeting.

The minister of finance said that to catch up on the decrease within the GST revenue of the states, the central government cannot raise debt from the market because it may increase the value of debt within the market. There was no consensus on the modalities to catch up on the reduction in GST revenue of the states.

Finance Minister Sitharaman said that the collection of cess is insufficient to pay compensation. It’s completely clear and since it’s something that was never envisaged, this deficiency will now be bridged by borrowing.

Sitharaman said that we weren’t ready to reach a consensus. I appealed to all or any the states that we’ve to reply quickly to those states who are fighting the battle with COVID-19 on the bottom and who need money. Today the GST Council meeting led to an identical manner.

Finance Minister Sitharaman said that at a time when the country is trying to find more funds for investment and borrowing for business, we cannot bear the increased cost of borrowing. He said that if the states borrow, things won’t be so serious.

He said that states’ borrowing doesn’t mean that things will become turbulent. The minister of finance said that we’ll provide facilities to the states in order that some states will need to pay interest at a better rate and other states are going to be ready to borrow at an inexpensive rate.

The GST compensation revenue is predicted to fall by Rs 2.35 lakh crore
, consistent with sources, the unilateral agenda of the 43rd meeting of the GST Council is to seek out how forward on the difficulty of compensation. Within the last meeting held last week, the council decided that luxury or harmful products like cars, tobacco, etc. would be levied on cess even after June 2022. However, there was no consensus on the difficulty of compensation within the said meeting.

The GST compensation revenue is predicted to fall by Rs 2.35 lakh crore within the current fiscal year. The central government has given two options to the states in August. Under the primary option, there’s a proposal to supply a special facility for the loan of Rs 97 thousand crores by the Federal Reserve Bank, and under the second option, it’s proposed to boost the whole Rs 2.35 lakh crore from the market.

The central government says that GST implementation is liable for just Rs 97 thousand crores within the estimated reduction in GST compensation revenue, while the remaining decrease is thanks to the coronavirus epidemic. After the demand of some states, the special loan arrangement under the primary option has been increased from Rs 97 thousand crores to Rs 1.10 lakh crore.

Giving information to reporters after the 42nd meeting of the GST Council, minister of finance Nirmala Sitharaman had said that for the states which received less within the share of Integrated GST (IGST) for 2017-18, the middle collects 24,000 crores cumulatively next week. Rupees are going to be released.

He said that it’s been decided to impose compensation cess even after five years i.e. after June 2022. It’ll be levied for the amount that’s necessary to satisfy the revenue gap. ‘ Also, the Union Minister said that the GST Council has approved the proposal to continue the GST cess even after June 2022. The deadline for levying the primary GST cess was June 2022.

States got two options
Sitharaman said that 21 state governments accepted one among the 2 options suggested by the middle, but 10 didn’t agree. The middle had given two options to the states to boost a loan of Rs 97,000 crore or Rs 2.35 lakh crore from the market through a special facility provided by the Federal Reserve Bank.

The improvement in GST collection
September could also be seen that there was an improvement in GST collection in September. The products and Services Tax (GST) collection stood at Rs 95,480 crore in September. Whereas in August it had decreased by one percent and stood at Rs 86,449 crore. That is, it had been 9031 crores more in September. The figure stood at Rs 87,422 crore in July. The GST collection stood at Rs 90,917 crore as of June.

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Anurag Srivastva
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