GST Council mulls compensation package for FY22

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Finance Minister Nirmala Sitharaman is likely to call a meeting with the state governments to decide on the GST compensation shortfall for the financial year 2021-22.

“Even as revenue collection is improving, there will be some shortfall in GST collection this year, too. So there will be again an issue of compensation. Last year arrangement was only for FY21. So, the matter has to be discussed with the states again, in consultation with the 15th Finance Commission, to decide on the roadmap as to how it will be carried forward for the next financial year (FY: 2021-22),” said an official in the finance ministry.

The official added the meeting is likely to happen either before the Budget session starts or after it commences.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.1 lakh crore in revenue arising on account of implementation of GST for the financial year 2020-21. So far, the Centre has released Rs 1 lakh crore to states and Union Territories to meet GST compensation shortfall, the Finance Ministry said on Saturday.

The ministry on Friday released the 17th weekly instalment of Rs 5,000 crore to 23 states and three Union Territories (Delhi, Jammu & Kashmir and Puducherry), taking the total amount released so far, under the special borrowing window set up in October last year, to Rs 1 lakh crore.

Sources said that this meeting will be a single-agenda meeting, while the Council will meet separately on other issues as per the schedule. Sources added that the GST council will be also taking up the issue of merging two tax brackets, as the fitment panel suggested.

However, it is unlikely to happen immediately and will be done only after seeing the collection momentum in the coming months.

Source from: https://www.newindianexpress.com/business/2021/feb/21/gst-council-mulls-compensation-package-for-fy22-2266716.html

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