GST Shortfall at Rs 2.35 Lakh Crore: Only Act of God May Result in Contraction of Economy, Says Sitharaman

New Delhi: Union Finance Minister Nirmala Sitharaman on Thursday chaired the 41st GST Council meeting and said that the GST collection has been severely impacted due to pandemic. Also Read – Remembering Arun Jaitley: A Look at How GST Reduced Tax Rates, Doubled Taxpayer Base to 1.24 cr

“Only the ‘Act of God’ may result in contraction of economy this fiscal,” Finance Minister Nirmala Sitharaman said at the 41st GST Council meeting, referring to the coronavirus pandemic. Also Read – PM Modi Reviews Preparations For Master Plan For Multi-modal Connectivity to Economic Zones

During the meeting, Revenue Secretary highlighted that the GST shortfall in FY21 is at Rs 2.35 lakh crore; of which only Rs 97k crore due to implementation of GST, rest due to pandemic. He also stated that the GST collection has been severely impacted due to pandemic. Also Read – Good News! Finance Ministry Working on Norms For Salaries of Retired Central Govt Officials Re-appointed on Contract

Addressing a press conference soon after the GST Council meet, Sitharaman said that options discussed for meeting GST shortfall only for current fiscal. She said the GST Council will look at issue again in April next year.

Sitharaman said that the Central government will give a further relaxation of 0.5% in states’ borrowing limit under FRBM Act.

“The Central government will give a further relaxation of 0.5% in states’ borrowing limit under FRBM Act as 2nd leg of Option 1. States can choose to borrow more, beyond expected compensation itself, since that is the injury caused by COVID-19,” she said.

She said there may be some states which may prefer to get hard-wired compensation rather than going to market to borrow more. “Option was tailor-made considering that states can take a call depending on compensation they expect to come,” she added.

She said once the arrangement is agreed upon by the GST Council, the government can proceed fast and clear these dues and also take care of the rest of the financial year.