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GST Council to discuss compensation for states for third time tomorrow; decision on setting up group of ministers likely – Business News , Firstpost



In its earlier assembly final week, the Council had determined to lengthen the surcharge on taxes on luxurious items past June 2022 however failed to attain a consensus on methods to compensate states for loss of tax income

New Delhi: The GST Council in its assembly on Monday is likely to discuss the suggestion of non-BJP dominated states of setting up a ministerial panel to develop consensus on the problem of compensation, sources mentioned.

The Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising of state finance ministers, will for the third time in a row discuss the problem of funding the shortfall of Goods and Services Tax (GST) income of states.

While some Opposition dominated states are demanding {that a} Group of Ministers be set up to arrive at a decision on the mechanism for funding compensation shortfall, BJP dominated states, which have already opted for the borrowing possibility given by the Centre, are of the view that they need to be given a go-forward in order that they’ll get cash rapidly.

The single agenda 43rd assembly of the Council will discuss on the way in which ahead, sources mentioned.

In its earlier assembly final week, the Council had determined to lengthen the surcharge on taxes on luxurious items similar to automobiles and tobacco merchandise past June 2022 however failed to attain a consensus on methods to compensate states for loss of tax income.

The projected complete compensation shortfall within the present fiscal stands at Rs 2.35 lakh crore.

The Centre in August gave two choices to the states to borrow both Rs 97,000 crore from a particular window facilitated by the RBI or Rs 2.35 lakh crore from the market and had additionally proposed extending the compensation cess levied on luxurious, demerit and sin items past 2022 to repay the borrowing.

Following a requirement by some states, the quantity of Rs 97,000 crore was elevated to Rs 1.10 lakh crore.

As many as 21 states – that are BJP dominated or have supported it on numerous points – have opted to borrow Rs 1.10 lakh crore to meet the compensation shortfall.

The Centre has launched Rs 20,000 crore to the states in the direction of compensation shortfall to this point within the present fiscal.

Under the GST construction, taxes are levied beneath 5, 12, 18 and 28 per cent slabs.

On high of the best tax slab, a cess is levied on luxurious, sin and demerit items, and the proceeds from the identical are used to compensate states for any income loss.

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