(ET)
The Goods and Services Tax (GST) Council was deadlocked on the issue of compensation to be paid to states on account of the shortfall stemming from the transition to the levy in 2017. It however decided to extend the compensation cess beyond 2022—the five-year period that had been agreed originally. The council will meet again on October 12 to discuss the issue.
The Centre will immediately disburse Rs 20,000 crore collected in the cess fund in the current financial year to states, Union finance minister Nirmala Sitharaman, also the council chairman, told reporters after its Monday meeting. “This would be disbursed tonight itself,” she said. On integrated GST distribution, she said Rs 24,000 crore will be paid to states that had not received the payment as recommended by a group of ministers.
GST collections have fallen short on account of the Covid-19 pandemic, in turn hitting compensation to states. Opposition-ruled states maintain that the Centre should borrow from the market to raise the money for compensation payments. The Centre wants the states to make the borrowings themselves instead.
