KEY STORY
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Finance Ministry sources said Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal are yet to respond to the GST Council proposal to decide their options.
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As many as 21 states, mostly ruled by BJP or parties which have supported it on various issues, have opted to borrow Rs 97,000 crore to meet the GST revenue shortfall in the current fiscal, sources said on Sunday.
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The states and union territories (UTs) which have intimated their decision to the Centre are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand and Uttar Pradesh.
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GST Council with full presence of states and UTs needs, as per the GST Act, only 20 states to pass any resolution, in case voting is required on any issue, the sources added. In the current fiscal, the states are staring at a staggering Rs 2.35 lakh crore Goods and Services Tax (GST) revenue shortfall.
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The sources said few more states are also to intimate their borrowing option in a day or two. They added that Manipur, which had earlier opted to borrow Rs 2.35 lakh crore, later changed its preference to the Rs 97,000 crore option.
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The non-BJP ruled states are at loggerheads with the Centre over the issue of funding shortfall. The chief ministers of six non-BJP ruled states — West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu — have written to Centre opposing the options which require states to borrow to meet the shortfall.
21 States/UTs have preferred to opt for borrowing under option 1 to meet their compensation shortfall: @FinMinIndia Official https://t.co/YfeiD0WfFM
— GST INSIGHTS (@InGSTPortal) September 20, 2020
United diagnosticss
CONCLUSION
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The Attorney General for India KK Venugopal had given his legal view on the compensation cess issue where he has opined that there is no obligation on the Centre under the GST laws to compensate for loss of revenue.
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He had opined that the GST Council has to find ways to meet any revenue shortfall arising out of GST implementation.
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States that have not earned much this year due to months of lockdown necessitated by the COVID-19 crisis. Punjab, for example, has said it may see a revenue deficit of ₹ 25,000 crore this year.
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GST collections including compensation cess to the states had been falling short of targets even before the coronavirus pandemic, making it difficult for the centre to compensate the states.
