The meeting is likely to get heated as non-BJP ruled states are still in disagreement with the Centre on the GST compensation issue.
Union Finance Minister Nirmala Sitharaman will chair the 42nd GST Council meeting via video conferencing at 11 AM in New Delhi on Monday. The meeting will be attended by MoS Anurag Thakur besides Finance Ministers of States & UTs along with senior officers from the Centre.
The meeting is likely to get heated as non-BJP ruled states are still in disagreement with the Centre on the compensation issue.
Opposition states like West Bengal, Punjab, and Kerala are not happy with the borrowing option proposed by the Centre to meet GST revenue shortfall. Meanwhile, as many as 21 states had till mid-September opted to borrow Rs 97,000 crore to meet the shortfall.
Sources have stated that opposition-ruled states would object to the Centre’s borrowing options and demand an alternative mechanism for funding the GST compensation deficit in the GST council meeting. In the current fiscal year, the states are at a staggering Rs 2.35 lakh crore Goods and Services Tax (GST) revenue shortfall, and they feel that the constitutional liability of compensating states lies with the government.
Chief Ministers of six non-BJP ruled states–West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu–have expressed their disapproval over the issue by writing to the Centre opposing the option of borrowing to meet the shortfall.
While these states want the Centre to borrow to meet the shortfall, the Centre has argued that the revenue accruing from GST compensation cess goes to the states and the Centre cannot borrow on the security of the tax it does not own.
The payment of GST compensation to states became an issue after revenues from the imposition of cess started dwindling since August 2019. The Centre had to dive into the excess cess amount collected during 2017-18 and 2018-19.
During April-July of the current fiscal, the total compensation due to states stands at over Rs 1.51 lakh crore.
