There was no consensus on the issue of GST compensation even in the October 12 meeting. Now the finance ministry said on Thursday that the central government will take a loan of Rs 1.1 lakh crore to meet the shortfall in the GST of the states.

The Finance Ministry said in a statement that the loan amount will be given to the states. According to the Center, this fund will be given to the states in the form of loan in lieu of GST Compensation Cess release. In August, the Center made two proposals to states to compensate for the reduction in GST.

The Center gave these two options to the states, under the proposal of the Center, the state could take a loan of Rs 97,000 crore or take a loan of Rs 2.35 lakh crore from the market through the special facility provided by the RBI. 21 states agree with the first proposal of the Center, but the remaining states turned down.

Now, after the demand of some states, the special loan system of borrowing has been increased from Rs 97 thousand crore to Rs 1.11 lakh crore under the first option. Under the first option, the states will be able to carry forward the unutilized portion of the loan amount fixed for them in the next financial year.

According to the Finance Ministry, under this special loan arrangement, the Government of India will take the loan in appropriate installments to meet the total estimated reduction of Rs 1.1 lakh crore in GST. This will not affect the government’s fiscal deficit.

What is the arithmetic of compensation The GST compensation of about 2.35 lakh crore rupees is owed to the states, but the math of the central government is that out of this, the loss of about 97,000 crores is due to the implementation of GST, the rest is about 1.38 lakh crores. The revenue loss of Corona is due to epidemic and lockdown.

 

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