41st GST Council Meeting Highlights
The 41st GST Council meeting was held on Thursday, 27th August 2020. Union Finance Minister Nirmala Sitharaman chaired the meeting conducted virtually via Video Conferencing.
Agenda of the 41st GST Council Meeting
The Hon’ble FM last announced a meeting for deliberating the single-point agenda of compensation cess in the previous GST Council meeting held on 12th June 2020. It was also announced that the meeting would be scheduled in July 2020. However, the date had not been confirmed so far.
Expectations from the 41st GST Council Meeting
Issues such as compensation to states and GST rates revision.
Issues such as compensation to states, revenue shortfall.
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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 the 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.
2. States will also be given a further relaxation in FRBM of 0.5\% points for market borrowing.
3. States Seek Seven Days To Consider Cess Option
4. 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.
5. This is not the appropriate time to talk of increases in tax rates.
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.