GST Council Meeting Postponed to October 5

Of this, as per Centre’s calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is the impact of COVID-19 on states’ revenues. The Centre late last month gave two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the Reserve Bank of India (RBI) or Rs 2.35 lakh crore from market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.

Chief ministers of 6 non-BJP ruled states — West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu — have written to the Centre opposing the options which require states to borrow to meet the shortfall. Sources said till September 8, as many as 7 states have conveyed to the Centre about their choice of the options.

While Gujarat, Bihar, Madhya Pradesh, Karnataka and Tripura opted for borrowing Rs 97,000 crore, Sikkim and Manipur opted for the second option to borrow Rs 2.35 lakh crore. The Centre on its part argued that the revenue accruing from GST compensation cess goes to the states and hence the Centre cannot borrow on the security of a tax it does not own.

For April-July, the GST compensation due to states stands at Rs 1.50 lakh crore.