New Delhi: Finance Minister Nirmala Sitharaman, after the meeting of the 42nd GST Council, said that around ₹ 20,000 crore will be released as GST compensation due to state governments for this year.
The Council failed to provide any solution of repayment of total compensation around ₹ 97,000 crore.
A decision on this matter has been postponed till the next meeting on October 12.
The GST Council also extended the cess tax for another five years.
The charge on the luxury products, which is part of the GST, had been due to expire in 2022.
GST compensation has emerged as an important issue with the adverse economic impact of the COVID-19 pandemic and lockdown this year.
The centre is finding it difficult to pay states’ compensation because they have not earned much this year due to lockdown for the COVID-19.
After a meeting of GST Council earlier this year, states and UT governments have been asked to borrow – either the full amount of ₹ 2.35 lakh crore (which included Covid relief) or ₹ 97,000 crore (which was only GST compensation).
So far 21 states have agreed to borrow and 10 opposition-ruled states rejected the proposal.
States, including Kerala and Bengal, wrote to Narendra Modi, reminding him of his “constitutional” responsibilities at this time.
The states which are opposing borrowing as a method of repayment pointed out that it can place extra burden on their finances during an already difficult time.