Sitharaman, interacting with the media after the meeting, said the coronavirus pandemic is an “Act of God” and it may result in contraction of the economy this fiscal.
On Thursday, the central government said the coronavirus pandemic has hit the Goods and Services Tax (GST) collection resulting in the shortfall is Rs 2.35 lakh crore. The announcement was made after Finance Minister Nirmala Sitharaman chaired a GST council meeting.
Sitharaman, interacting with the media after the meeting, said the coronavirus pandemic is an “Act of God” and it may result in contraction of the economy this fiscal.
“The annual GST compensation requirement is estimated to be around Rs 3 lakh crore, and cess collection is expected to be around Rs 65,000 crore, leaving us with an annual compensation gap of Rs 2.35 lakh crore,” Revenue Secretary at Finance Ministry, Ajay Bhushan Pandey said.
During the April to July quarter, total GST compensation to be paid is Rs 1.5 lakh crore, he added. “This is so because there was hardly any GST Collection in April and May,” he stressed.
Though opposition Chief Minister hit out at the centre, in a virtual meeting called by Sonia Gandhi, citing statutory obligation of covering the deficit, the Union government cited a legal opinion to say it had no such obligation if there was a shortfall in tax collections.
The five-hour-long GST council meeting was attended by representatives of all states, who held deliberations via video conferencing on ways to make up for the shortfall in states’ revenues.
The states should borrow to compensate for the shortfall in the tax revenues that have been compounded by the Covid-19 crisis, the centre expressed.
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