GST Council to discuss states’ compensation on 27 August


The Goods and Services Tax (GST) Council is scheduled to meet on 27 August in a bid to discuss revenue compensation to states, an agenda state finance ministers have been pitching for.


Amidst the Covid-19 scare, the council meeting will be conducted through videoconferencing. Further, the council will be exploring ways of meeting the void between GST cess collections and the total compensation to be granted to states according to a central government guarantee.

The council will be meeting again on 19 September for discussing other GST-related issues, reported In July, the centre released Rs 13,806 crore to states as GST compensation for March, completing the payment for FY20. In FY20, it paid Rs 1.65 trillion.

One of the pivotal issues likely to be discussed during the meet is how much of the revenue loss of states would the Centre be agreeing to manage. Under the law, states are guaranteed 14 percent annual hike in revenue taking FY16 as the base year. However, the centre has maintained that it can only be arranging for the shortfall from funds collected as GST cess. Another proposal is to grant the council to borrow from the market in a bid to meet the shortfall, and repay by extending GST cess levy beyond 2022.

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