GST Council to meet again in July: Compensation to States

NEW DELHI: Faced with a sharp decline in GST collections due to the lockdown and disruptions in economic activities across the country, the Central government may look at paying GST compensation to states using a portion of its borrowings.

Coming out of the first GST Council taking place against the backdrop of Covid-19 pandemic, Finance Minister Nirmala Sitharaman said that the Council decided to meet again in July with single point agenda to discuss compensation cess.

"If there is need for borrowings to meet compensation to states, who is going to borrow. How we are going to pay for it...," she said about next meeting of the Council, hinting that fall in revenues has become big cause of concern for the Centre to meet its liability towards the states as per GST legislation. Under GST law, states are guaranteed full compensation for any revenue loss for the first five years after the introduction of the goods and services tax (GST) in July 2017. The compensation is gap between the actual revenue collected and projected revenue. (IANS)

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