Page 12 - Banking Finance July 2020

GST UPDATE

GST

NEWS
NEWS
NEWS
NEWS
NEWS

GST severely hit due to ment and states. After 5-hour-long General of India who said that GST
meet, the GST Council held a video compensation has to be paid for
Covid-19 pandemic, says press conference with the media. transition period from July 2017 to
Centre "GST collection has been severely im- June 2022: Finance Secretary Ajay

The Goods and Services Tax (GST) col- pacted this year, due to Covid-19 pan- Bhushan Pandey
lection has been severely impacted demic. As per GST Compensation Law, Y The Attorney General of India said
due to coronavirus pandemic this year, states need to be given compensation, that protected revenue has to be
says Revenue Secretary after GST " Finance Secretary said during the protected but compensation gap
Council meeting. conference. to be met from cess fund, which
The Finance Minister Nirmala Here are the highlights from in turn has to be funded from levy
Sitharaman held 41st Goods and Ser- the video conference: of cess: Finance Secretary Ajay
vices Tax (GST) Council meeting. Bhushan Pandey
Y Central government released
The states were guaranteed payment more than Rs 1.65 lakh crore as Y Compensation gap which has
for any loss of revenue in the first five GST compensation to states for FY arisen this year (expected to be Rs
years of GST implementation from July 2019-20, including Rs 13,806 crore 2.35 lakh crores), is due to Covid-
1, 2017 under the Central Goods and for March. Total amount of com- 19 as well. The shortfall in com-
Services Tax Act. However, due to the pensation released for 2019-20 is pensation due to the implementa-
Covid-19 outbreak, the compensation Rs 1.65 lakh crore, whereas cess tion of GST has been estimated to
cess collection have jumped. amount collected was Rs 95,444 be Rs 97,000 crores: Finance Sec-
At the meeting, two options of com- crore: Finance Secretary retary on 41st GST Council Meet
pensating states were discussed, in- Y Attorney-General said that GST Y AG's clear opinion was that com-
cluding borrowing from the Reserve Compensation has to be paid for a pensation gap cannot be met
Bank of India (RBI). transition period- from July 2017 from India's consolidated fund.

The finance minister said that the op- to June 2022. Revenue has to be Option 1 presented to GST Coun-
cil was to provide a special window
tions discussed for meeting GST short- protected compensation gap to to states, in consultation with RBI
fall are only for the current fiscal. The be met from cess fund, which in to provide Rs 97000 crores at a
GST Council will look at the issue again turn has to be funded from levy of reasonable interest rate: Finance
in April next year. cess: Ajay Bhushan Pandey, Fi- Secretary Ajay Pandey
nance Secretary on GST
The meeting was attended by Anurag Y Option 2 presented to GST Coun-
Thakur, Minister of State (MoS) for Fi- Y As mentioned by Finance Minister cil was that the entire GST com-
nance, finance ministers of various in GST Council meeting held in pensation gap of Rs 2,35,000
states and Union Territories (UT) and March, legal views of the matter crore of this year can be met by
senior officers from the Union Govern- were sought from the Attorney
states, in consultation with RBI.

12 | 2020 | JULY | BANKING FINANCE