₹1.51 Lakh Crore GST Compensation Due To States; GDP Contraction, Lockdown, Etc., Reasons For Revenue Shortfall: Centre Tells Lok Sabha

The GST compensation due to states stands at over ₹1.51 lakh crore, said the Union Ministry of Finance on Monday in the Lok Sabha.The Ministry said that the nominal GDP for Q1 (April-June), 2020-21 shows a contraction of 22.6% which is one of the major reasons for the revenue shortfall in GST."The BE estimates for FY 2020-21 of GST in the Union Budget, 2020-21 were projected on the basis of assumption of higher growth of GDP, however as per CSO, MoS&PI press release [on 31st August, 2020], the Nominal GDP for Q1 (April-June), 2020-21 shows a contraction of 22.6% which is one of the major reason for revenue shortfall in GST", the Ministry said in a reply to an unstarred question raised by S Jothimani, Congress MP from Tamil Nadu ."Other reasons for low tax collection inter-alia include nationwide lockdown measures implemented since March 2020 consequent to global Covid-19 pandemic which led to limited economic activities, extension of GST return filings timelines without payment of interest, late fee or penalty etc", said Anurag Thakur, Minister of State for Finance and Corporate Affairs in the reply.The Finance Ministry gives details of the provisional GST compensation due to states for the FY 2020-21.@FinMinIndia #GST pic.twitter.com/9EVqAZuIho— Live Law (@LiveLawIndia) September 15, 2020 The provisional GST compensation due to states/UTs for 2020-21 was highest for Maharashtra at ₹22,485 crore, followed by Karnataka (₹13,763 crore), Uttar Pradesh (₹11,742 crore), Gujarat (₹11,563 crore) and Tamil Nadu (₹11,269 crore). The compensation due to West Bengal stands at ₹7,750 crore, Kerala (₹7,077 crore), Punjab (₹6,959 crore), Delhi (₹6,931 crore), Rajasthan (₹6,312 crore), Telangana (₹5,424 crore) and Chhattisgarh (₹2,827 crore).Mr. Thakur gave this data in reply to another unstarred question raised by several MPs on the GST shortfall.As per provisions in Section 7 of the GST (Compensation to States) Act, 2017 loss of revenue to the States shall be calculated and released at the end of every two months' period, for 5 years. The Minister informed that admissible GST compensation for the period April, 2019 to March, 2020 has been released to all States/ UTs . Due to short GST Compensation Cess collection in the current financial year, GST compensation is yet to be paid for the period April-July, 2020, he added."The average gross GST collection in the FY 2020-21 has shown declining trend as compared to the previous Financial Year. This may be attributed to the COVID Pandemic induced Lockdown and relief measures extended to the taxpayers by the Government by way of waiving the interest, late fee and extending the return filing dates", he said.The Minister said the issue of pending compensation and future course of action to meet the shortfall was discussed in the 41st GST Council meeting on August 27 wherein states were given two options to meet their GST compensation shortfall for current fiscal year from market borrowing."It was also decided that states will give their preference views thereon. Thereafter on finalisation of scheme, states can choose either Option 1 or Option 2 and accordingly, their compensation, borrowing, repayment etc will be dealt as per their individual choice," he added.The states' GST revenue shortfall is estimated to be staggering ₹2.35 lakh, of which the Centre calculates about ₹97,000 crore on account of GST implementation and the rest ₹1.38 lakh crore due to the impact of COVID-19 and lockdown.The Centre late last month gave two options to states to borrow either ₹97,000 crore from a special window facilitated by the RBI or ₹2.35 lakh crore from market and also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.Click here to download the first reply of the Ministry of Finance n GST shortfallClick here to download the second reply of the Ministry of Finance on GST compensationRead the replies of Ministry of Finance on GST short fall

₹1.51 Lakh Crore GST Compensation Due To States; GDP Contraction, Lockdown, Etc., Reasons For Revenue Shortfall: Centre Tells Lok Sabha

LIVELAW NEWS NETWORK

Tags