New Delhi Finance Minister Nirmala Sitharaman said that the GST Council would meet again on October 12 and an effort would be made to reach an agreement between the state governments and the Center on lending options for GST compensation. The decision to meet again in October has been taken by Bihar Deputy Chief Minister and Finance Minister Sushil Modi. The deadlock between the central and state governments over the issue of compensation could not end at Monday’s meeting of the council.
Addressing a press conference after the meeting, Sitharaman said that only 20 states accepted option-1. He said, “We need to talk further.”
Earlier in the 41st meeting of the GST Council, the Center provided two options to the state governments. Under the first option, states can borrow up to Rs 97,000 crore at a reasonable interest rate from the special window of the Reserve Bank of India (RBI) for compensation. This amount can be repaid in the five years after 2022. In the second option, the states have been given the option to raise a total of 2.35 lakh crore rupees by borrowing.
There are differences between states regarding options to the Center. Bharatiya Janata Party (BJP)-ruled states are ready to adopt the first option. The rest of the states are opposing both options. Because of this, the deadlock on this issue remains.
As per the Finance Ministry estimates, the GST compensation gap is estimated to be Rs 2.35 lakh crore in FY 2021, as the Center is expected to collect only Rs 65,000 crore from the GST cess due to reduction in economic activity from Kovid-19.
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