GST Update: Centre permits 20 States to raise Rs 68,825 crore through borrowing to match GST shortfall

GST

The Centre has granted its permission to 20 States for raising Rs 68,825 crore via open market borrowings in a bid to meet the shortfall in the compensation cess a day after post the Goods and Services Tax (GST) council meet concluded without bringing any resolution on the issue. This permission is granted to the states that have opted for the first of two options suggested by the government for meeting the shortfall created out of GST implementation, said the finance ministry said in a statement.
As directed, the borrowing amount is 0.5% of gross state domestic product (GSDP).

The total shortfall in the revenue of states on this account has been estimated at around Rs 1.1lakh crore, the ministry said in its statement.

As per the first option given by the centre, states have been given permission to borrow Rs 1.1 lakh crore from the market. This will be serviced through the compensation cess that has been pushed beyond the originally gave nod five-year tenure that ends June 2022.

Also Read:- Covid-19 brought challenging times for GST

The borrowing states mentioned in the centre’s list are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand.
The states will also be provided a special window to borrow the amount through the issue of debt.

“Action on the special borrowing window is being taken separately,” the ministry said, adding that eight states were yet to opt for an option.

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