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    15 states give consent to borrowing options proposed by GST Council

    15 states give consent to borrowing options proposed by GST Council

    15 states give consent to borrowing options proposed by GST Council
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    By Timsy Jaipuria   IST (Updated)

    In what could help the Centre pave the way over the GST compensation issue at the 42nd GST Council meet to be held on October 5, almost 15 out of 31 states and union territories have given their consent to the government regarding the two borrowing options suggested.
    "Those in agreement with option 1 include Assam, Goa, Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, Uttar Pradesh, Uttarakhand and Odisha," Finance Ministry sources told CNBC-TV18.
    States like Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh will formally submit their choice of option soon, sources added. Manipur is the only state to have opted for option 2.
    A few states have conveyed to the finance ministry that they would submit their views directly at the next GST Council meet as they were yet to decide on the options.
    States and UTs that are not in favour of either options include Delhi, Punjab, Rajasthan, Chhattisgarh, Tamil Nadu, Jharkhand, Telangana, Puducherry, Kerala and West Bengal.
    Earlier in the day, Minister of State for Finance Anurag Singh Thakur informed the Parliament that compensation due to states stood at over Rs 1.51 lakh crore.
    The provisional GST compensation due to states/UTs for 2020-21 was highest for Maharashtra at Rs 22,485 crore, followed by Karnataka (Rs 13,763 crore), Uttar Pradesh (Rs 11,742 crore), Gujarat (Rs 11,563 crore) and Tamil Nadu (Rs 11,269 crore).
    The compensation due to West Bengal stands at Rs 7,750 crore, Kerala (Rs 7,077 crore), Punjab (Rs 6,959 crore), Delhi (Rs 6,931 crore), Rajasthan (Rs 6312 crore), Telangana (Rs 5,424 crore) and Chhattisgarh (Rs 2,827 crore).
    The total provisional GST compensation due to 31 states and UTs for 2020-21 put together stands at Rs 1,51,365 crore.
    Thakur said the issue of pending compensation and future course of action to meet the shortfall was discussed at the 41st GST Council meeting on August 27, wherein states were given two options to meet their GST compensation shortfall for the current fiscal from market borrowing.
    "It was also decided that states will give their preference views thereon. Thereafter, on finalisation of scheme, states can choose either option 1 or 2, and accordingly their compensation, borrowing, repayment etc will be dealt as per their individual choice," he added.
    In the current fiscal, states are staring at a staggering Rs 2.35 lakh crore GST revenue shortfall.
    Of this, as per the Centre's calculation, about Rs 97,000 crore is on account of GST implementation and the rest Rs 1.38 lakh crore is due to the impact of COVID-19 on states' revenues.
    In late August, the Centre made two options available to states and UTs -- to either borrow Rs 97,000 crore from a special window facilitated by RBI or borrow Rs 2.35 lakh crore from the market -- and proposed extending compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.
    Meanwhile, in reply to a separate question, Thakur said that the total net GST target for the Centre has been pegged at Rs 6,90,500 crore for 2020-21 in the Union Budget.
    The actual net GST collection until August 2020 was Rs 1,81,050 crore, which is 26.2 percent of budget estimates (BE).
    "The BEs for FY20-21 of GST in the Union Budget, 2020-21 were projected on the basis of assumption of higher growth of GDP, however as per CSO, MoS&PI ... the Nominal GDP for Q1 (April-June), 2020-21 shows a contraction of 22.6 per cent which is one of the major reasons for revenue shortfall in GST.
    "Other reasons for low tax collection inter-alia include nationwide lockdown measures implemented since March 2020, consequent to global COVID-19 pandemic which led to limited economic activities, extension of GST return filings timelines without payment of interest, late fee or penalty etc," Thakur said.
    Meanwhile, sources added, "Some states are changing their stand after the Centre re-assured that any burden to repay the borrowing will be put on states, rather entire borrowing will be repaid using the cess window and if need be the cess period will be extended to ensure repayment."
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