States seek 7 days on options as Centre says GST collection impacted

FM Sitharaman said states have two options on GST compensation: borrowing from the market or tapping the central bank
The coronavirus pandemic was an "act of God" that may even lead to contraction in the economy and has "severely impacted" goods and services (GST) collection, said the central government on Thursday as it offered states two options to meet their revenue shortfall.

The GST collection shortfall is Rs 2.35 trillion for fiscal 2021, the government after a meeting of the GST Council. The centre has released over Rs 1.65 trillion as GST compensation to states for fiscal 2020, including Rs 13,806 crore for March, Finance Minister Nirmala Sitharaman said.

Sitharaman said states have two options on GST compensation: borrowing from the market or tapping the central bank. The states will "come back after seven working days" when another meeting of the council may be held.

The coronavirus pandemic is an "act of God that may even lead to contraction in the economy", she said. 

“GST collection has been severely impacted this year, due to Covid-19 pandemic. As per GST Compensation Law, states need to be given compensation, “ said Finance Secretary Ajay Bhushan Pandey.

The meeting was also attended by Anurag Thakur, Minister of State (MoS) for Finance, finance ministers of various states and Union Territories (UT) and senior officers from the Union Government and states. After 5-hour-long meet, the GST Council held a video press conference with the media.

Congress president Sonia Gandhi on Wednesday called the Centre's refusal to reimburse the states as nothing short of betrayal of the people by the Modi government.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel