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GST council meet: Rs 20,000 crore compensation cess to be dispersed to states soon, says Sitharaman


New Delhi, Oct 05: Finance Minister Nirmala Sitharaman said the compensation cess collected this year amounting to Rs 20,000 crore will be dispersed to the states soon.

Nirmala Sitharaman

A further Rs 24,000 crore of IGST (integrated goods and service tax) will be released to states that received less earlier by the end of next week, Sitharaman further said.

The Finance Minister also said that the GST cess would have to be extended beyond the five year period initially agreed upon between the centre and states.

Sitharaman said 21 states had opted for one of the two options the Centre had previously suggested for borrowing to meet the shortfall in GST collections.

But some states did not opt for any of the two options, and the Council decided for more deliberations, she said, adding the panel will meet again on October 12.

She said the panel decided to extend using GST cess collections to compensate states beyond previously agreed June 2022 timeframe.

The panel besides easing compliance burden of small taxpayers also exempted satellite launch services by ISRO and Antrix, Finance Secretary Ajay Bhushan Pandey said.

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    The states are staring at a Rs 2.35 lakh crore GST revenue shortfall this fiscal. Of this, as per the Centre's calculation, Rs 97,000 crore is estimated to be on account of GST implementation, while the remaining Rs 1.38 lakh crore is due to the COVID-19 pandemic.

    The Centre late last month gave two options to states to borrow either Rs 97,000 crore from a special window facilitated by the RBI, or Rs 2.35 lakh crore from the market and also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.

    On the opposition charge that the government is reneging on its commitment of compensation payment by terming COVID-19 an 'act of God', Sitharaman said, "It is a irresponsible comment towards a responsible government, led by Prime Minister Narendra Modi."

    Chief Ministers of six 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 GST shortfall.

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