He also said given the very limited options available, Tamil Nadu chooses Option 1 suggested by the Central government, that is, raising debt from the market for a sum equivalent to the estimated GST revenue shortfall.
At the 42nd Goods and Services Tax Council meeting, held via video conferencing, Jayakumar said the revenue gap of states must be assessed based on an appropriate proportion of the total anticipated loss this financial year under Option 1, and that Tamil Nadu hopes that it is reworked to reflect a higher proportion of the actual loss in revenue of states.
He said the Group of Ministers set up for IGST settlement for 2017-18 has acknowledged that a sum of Rs 4,321 crore is due to Tamil Nadu.
"In 2020-21, for the period upto July 2020, compensation of Rs 12,258.94 crore is due to be paid to Tamil Nadu. It is a matter of grave urgency that the GST compensation payments are made immediately to enable us to continue to battle against Covid-19," Jayakumar told Union Finance Minister Nirmala Sitharaman who chaired the meeting.
He said that their stance has consistently been that the Centre "has a moral and legal obligation to pay the compensation for the shortfall in GST collections" and it is for the Centre to find the necessary funds to compensate the states, if there was a shortfall in the cess collections.
"As a via media in the 41st GST Council meeting, I had suggested that the Government of India could mobilise resources and lend the funds required to the GST Compensation Fund. The loan could then be serviced through an extension of the GST Cess for a few years beyond 2021-22," he said.
Jayakumar also stressed that the issue of GST compensation to the state should be resolved in a timely manner preserving mutual trust which is the bedrock of GST.
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