41st GST Council meeting outcome : Key highlights dated 27th August, 2020’

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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. Shru Anurag Thakur and Finance Ministers of States & UTs and Senior officers from Union Government & States are present.

EXPECTATIONS:

  • issues such as compensation to states and GST rates revision.
  • issues such as compensation to states, revenue shortfall.
  • two-wheeler industry desperately seeks GST rate cut
  • Finance Ministry to examine if sin tax applies to soft drinks
  • Issues such as the Centre should borrow from the market and provide to states as it will get a lower rate and easier access to markets. More so, since Centre has to make good on its promise to states for paying the due compensation.

41ST GST COUNCIL MEETING KEY HIGHLIGHTS

  1. States were given two options to make up for their revenue shortfall amid the Covid-19 pandemic.
  • to provide a special bowrrowing window to states, in consultation with the RBI, to provide Rs 97,000 crore at a “reasonable” interest rate and this money can then be repaid after 5 years by extending cess collection
  • to meet the entire GST compensation gap of Rs 2.35 lakh crore this year itself after consulting with the RBI
  1. States will also be given a further relaxation in FRBM of 0.5% points for market borrowing.
  2. States Seek Seven Days To Consider Cess Option
  3. 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.
  4. This is not the appropriate time to talk of increases in tax rates.
  5. 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

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