Political Keeda

Finance Minister extends the compensation cess beyond 2022 in the 42nd GST council meeting. 

Sitharaman says that the compensations collected this year out of the implementation of GST and COVID impact would be paid out to all the states by tonight. 
Finance Minister extends the compensation cess beyond 2022 in the 42nd GST council meeting.

Finance Minister Nirmala Sitharaman during the 42nd GST council meeting reported today that it has been decided to extend the compensation cees beyond 2022 and all the amount collected would be returned back to the states by tonight. 

"Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June 2022, for such period as may be required to meet the revenue gap. Further details to be worked out," the ministry said in a statement.

Among 29 States, 21 states are mostly ruled by the BJP which has supported the issue opted out to borrow the Rs97,000 crore to meet the GST revenue shortfall. West Bengal and many other states opposed the orders of revenue collection demands that the center should borrow instead of the state and another meeting should take place next week. 

Briefing reporters after the GST meetings said that the GST council has taken up the long-pending-issue of the Integrated Goods and Service Tax(IGST). a committee has been set up under the chairmanship of Bihar Deputy Chief Minister Sushil Modi has been formed to settle the issue of IGST. The total shortfall of the collection of GST has been estimated at 2.35 lakh crore. In the estimated shortfall,  97,000 crores has been on account of GST shortfall, while the rest is due COVID-19 pandemic. 
The two options before states by the centre were :

 1) A special window can be provided to the states, in consultation with the Reserve Bank of India, at a reasonable interest rate for the borrowing of  97,000 crores. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection. 

2) The second option is to borrow the entire  2.35 lakh crore shortfall under the special window.

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