The 41st meeting of the GST Council had its share of fireworks today. On the agenda was GST compensation due to the states from Centre. As per the Centre's calculation, the compensation shortfall is estimated at Rs 2.35 lakh crore. Of this, 97,000 crore is on account of GST shortfall, and the rest is due to the impact of COVID-19 on the economy. Central government has proposed two options to states to tackle with this shortfall.
First option has two legs, one leg is where the government is saying that it will facilitate through RBI so that states won't have to go running at different rates in the market. For that portion, which is 96,484 crore and some amount of which is strictly arising out of implementation of GST.
As soon as this arrangement is agreed upon by the Council, central government said it can fast-track and clear these dues and also take care of the rest of this financial year. Whether it is this option or that option, Centre has very clearly said that it wants this to be only for this year and early April 2021 the Council should again look at this situation and then take a call for the fifth year.
Manpreet Badal, finance minister of Punjab, said states are not happy with these two options given by Finance Minister Nirmala Sitharaman on GST dues.