41st GST Council meeting outcome : Key highlights dated 27th August, 2020
The 41st GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman via video conferencing today i.e. 27th day of August, 2020. Shri Anurag Thakur and Finance Ministers of States & UTs and Senior officers from Union Government & States were present.
In 41st GST Council Meeting it has been discussed that the shortfall for the Financial Year 2020-21 will be Rs 2,35,000 crore. Out of this, Rs 97,000 crore is the shortfall due to GST implementation, whereas the rest is considered as due to COVID-19.
41ST GST COUNCIL MEETING KEY HIGHLIGHTS
1. States were given two options to make up for their revenue shortfall amid the Covid-19 pandemic.
2. The pros and cons of both the options have been discussed also.
3. The arrangement will remain valid only for the FY 2020-21. Hence, the GST Council will reassess the situation in April 2021 and decide for the 5th year.
4. The states can borrow money with the G-security linked interest rates without any hurdles.
5. Once the arrangement is approved by the GST Council, the centre will proceed to clear these dues with the help of the RBI and also take care of the rest of the financial years
6. The states must take a decision based on the compensation cess they can expect in the future periods/years.
6. States will also be given a further relaxation in FRBM of 0.5% points for market borrowing.
7. The Attorney General is of the view that compensation needs to be paid to states for five years. But this compensation gap has to be met from the levy of cess.
8. This is not the appropriate time to talk of increases in tax rates.
9. Data analysis:
About Rs 3 lakh crore would be the need of compensation to be paid to states while compensation cess collected would be Rs 65,000 crore. April-July compensation is around Rs 1.50 lakh crore.
10. The GST Council is in planning stage to provide quick update on the level of preparedness of the GSTN in implementing the E-invoicing system from 1st October 2020.
Source- Various News Media and https://icmai.in/upload/Taxation/GST_Council_2808_2020.pdf
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