The 41st GST Council meeting was conducted on Thursday, 27th August 2020. The Finance Minister Nirmala Sitharaman chaired this meeting conducted virtually via video conferencing.
As per the decision made by Hon'ble FM Nirmala Sitharaman in 40th GST Council Meeeting held on 12th June 2020, This meeting was solely aimed to discuss the issue of the revenue compensation to states and find a solution to meet the gap between GST cess collections and the total compensation paid to the states.
Here are highlights of the 41st GST Council meeting:
- Two Options of Compensating States Discussed: Nirmala Sitharaman
- Option 1: To provide a special window to states, in consultation with RBI, to provide the Rs 97,000 crore at a reasonable rate of interest; this money can then be repaid after five years from the collection of cess.
- Option 2: Entire GST compensation gap of Rs 235,000 crore of this year can be met by the states, in consultation with RBI.
The states have asked to give them seven working days to think about the options, and the options will be available only during the current year. The government may have another GST Council meeting soon.
- Act Of God May Result In Economic Contraction This Fiscal Year: Finance Minister
Once an arrangement is agreed upon by the GST Council, the government can proceed fast and clear these dues, and also take care of the rest of the financial year. These options will be available only for this year, in April 2021, and the GST Council will review and decide on the action for the fifth year.
- Compensation Gap Also Risen Due To COVID-19: Finance Secretary
The gap in compensation to states, expected at ₹ 2.35 lakh crore, has risen this year due to the coronavirus pandemic as well, the Finance Secretary said. The shortfall due to the implementation of GST is estimated at ₹ 97,000 crore. The GST shortfall in the fiscal year 2020-21 is at ₹ 2.35 lakh crore, of which only ₹ 97,000 crore is due to the implementation of GST, and the rest due to COVID-19.
- GST Collection Severely Impacted This Year Due To COVID-19: Finance Secretary
The collection of Goods and Services Tax has been severely impacted this year due to the coronavirus pandemic. The Centre released over ₹ 1.65 lakh crore as GST compensation to states for the financial year 2019-20, which included ₹ 13,806 crores for the month of March.
Detailed Analysis to Continue…
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