The 42nd GST (Goods and Services Tax) Council meeting scheduled for September 19 will now be held on October 5. The decision to postpone the GST Council meeting has been taken due to the Parliament session, which is set to begin on September 14. Much like the 41st GST Council meeting, the 42nd GST Council will most likely be a single agenda meeting.
The issue of GST shortfall is also likely to be picked up in the Parliament session, following which another round of deliberations between states and the Centre can be expected. The GST Council meeting comes hot on the heels of the ongoing conflict between states and the Centre over the issue of Rs 2.35 lakh crore GST shortfall.
The central government gave two options to the states to meet the shortfall -- either borrow Rs 97,000 crore from a special window facilitated by the Reserve Bank of India (RBI) or borrow Rs 2.35 lakh crore, the estimated shortfall on account of GST transaction and COVID-19 induced slowdowns, from the market.
Of this, the central government has pegged Rs 97,000 crore allocation on account of GST compensation and the rest Rs 1.38 lakh crore due to COVID-19 impact on states. The centre is of the opinion that the revenue from the GST compensation cess goes to the states, and therefore, it cannot borrow on the security of the tax it does not own.
The chief ministers of six non-BJP ruled states -- West Bengal, Kerala, Delhi, Telangana, Tamil Nadu and Chhattisgarh -- have written to the Centre, opposing the two options put forward by the government. While Bihar, Gujarat, Karnataka, Madhya Pradesh and Tripura chose to borrow Rs 97,000 crore, states like Sikkim and Tripura chose to borrow Rs 2.35 lakh crore.
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