The finance minister was responding to a question on apprehensions raised by positive states in regards to the reported AG opinion on GST compensation.
- Last Updated: August 1, 2020, 4:24 PM IST
Finance Minister Nirmala Sitharaman on Saturday talked about the Attorney General’s view on GST compensation was needed session with the states and a gathering of the GST Council could possibly be held to debate the licensed opinion. The finance minister was responding to a question on apprehensions raised by positive states in regards to the reported AG opinion on GST compensation.
“This matter was discussed in the GST Council meeting when it met last time. Members expressed their views on the matter and it was decided that legal opinion should be taken from AG,” Sitharaman suggested reporters proper right here. The GST Council, chaired by the Union finance minister and comprising state counterparts, had in March decided to hunt views from the AG, who’s the chief licensed officer of the federal authorities, on the legality of market borrowing by the Council to make good the shortfall in compensation fund.
“The opinion has come…we will hold an exclusive GST Council meeting on the issue of compensation,” Sitharaman talked about, together with that the date of the meeting shall be decided shortly. According to sources, the Attorney General has opined that there isn’t any such factor as a obligation on the central authorities to pay the GST compensation shortfall to the states and GST Council has to find out on strategies to make good the shortfall in compensation fund.
The charge of GST compensation to states turned a problem after revenues from imposition of cess started dwindling since August 2019 and the Centre wanted to dive in to the excess cess amount collected all through 2017-18 and 2018-19. Under the Goods and Services Tax (GST) regulation, states had been assured to be compensated bi-monthly for any lack of revenue throughout the first 5 years of the GST implementation from July 1, 2017. The shortfall is calculated assuming a 14 per cent annual improvement in GST collections by states over the underside yr of 2015-16.
Under the GST building, taxes are levied beneath 5 per cent, 12 per cent, 18 per cent and 28 per cent slabs. On excessive of the very best tax slab, a cess is levied on luxurious, sin and demerit gadgets and the proceeds from the an identical are used to compensate states for any revenue loss. The Centre had launched over Rs 1.65 lakh crore in 2019-20 as GST compensation. However, the amount of cess collected all through the yr 2019-20 was Rs 95,444 crore. The compensation payout amount was Rs 69,275 crore in 2018-19 and Rs 41,146 crore in 2017-18.