States seek 7 days on options as Centre says GST collection impacted

The coronavirus pandemic was an "act of God" that may even lead to contraction in the economy, says Finance Minister.

The coronavirus pandemic was an "act of God" that may even lead to contraction in the economy and has "severely impacted" goods and services (GST) collection, said the central government on Thursday as it offered states two options to meet their revenue shortfall.

The GST collection shortfall is Rs 2.35 trillion for fiscal 2021, the government after a meeting of the GST Council. The centre has released over Rs 1.65 trillion as GST compensation to states for fiscal 2020, including Rs 13,806 crore for March, Finance Minister Nirmala Sitharaman said.

Sitharaman said states have two options on GST compensation: borrowing from the market or tapping the central bank. The states will "come back after seven working days" when another meeting of the council may be held.

The coronavirus pandemic is an "act of God that may even lead to contraction in the economy", she said. 

“GST collection has been severely impacted this year, due to Covid-19 pandemic. As per GST Compensation Law, states need to be given compensation, “ said Finance Secretary Ajay Bhushan Pandey.

The meeting was also attended by Anurag Thakur, Minister of State (MoS) for Finance, finance ministers of various states and Union Territories (UT) and senior officers from the Union Government and states. After 5-hour-long meet, the GST Council held a video press conference with the media.

Congress president Sonia Gandhi on Wednesday called the Centre's refusal to reimburse the states as nothing short of betrayal of the people by the Modi government.