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The GST Council meeting which was supposed to happen on 19th September, has been postponed to 5th October 2020.
The Centre had last month decided that the 41st and 42nd meeting of the Council would be held on 27th August and 19th September.However, then the dates for the monsoon session of Parliament was not decided.
The 5th October meeting assumes significance as the Centre and states are at loggerheads over the issue of funding ₹2.35 lakh crore GST collection shortfall.
Of this, as per Centre’s calculation, about ₹97,000 crore is on account of GST implementation and rest ₹1.38 lakh crore is the impact of COVID-19 on states’ revenues.
The Centre late last month gave two options to the states to borrow either ₹97,000 crore from a special window facilitated by the Reserve Bank of India (RBI) or ₹2.35 lakh crore from market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.
Chief ministers of 6 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 shortfall.
While Gujarat, Bihar, Madhya Pradesh, Karnataka and Tripura opted for borrowing ₹97,000 crore, Sikkim and Manipur opted for the second option to borrow ₹2.35 lakh crore.
The Centre on its part argued that the revenue accruing from GST compensation cess goes to the states and hence the Centre cannot borrow on the security of a tax it does not own.
For April-July, the GST compensation due to states stands at ₹1.50 lakh crore.