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Mismanaging GST

Compensation issue should have been deftly handled

Topics
Goods and Services Tax | GST compensation | Shortfall in GST Revenues

Business Standard Editorial Comment  |  New Delhi 



It is almost certain that the Centre will have its way on the (GST) compensation issue because 21 states and Union Territories have backed the offer for a Rs 97,000-crore Reserve Bank of India (RBI) window. Even if the plan comes up for voting in the GST Council, the Centre’s “victory” is a near-certainty, but it will be at a considerable cost because the lack of a consensus is bound to worsen the already fragile Centre-state relations. According to estimates, the revenue is likely to fall short by Rs 3 trillion in the current fiscal year. cess collection is likely to be about Rs 65,000 crore. This would leave a gap of Rs 2.35 trillion. In the last meeting of the Council, the Union government offered two options to the states, with the first option being a special RBI window to meet the revenue loss worth Rs 97,000 crore, which is presumably a result of GST implementation issues. States opting for this will also get relaxation in borrowing.

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First Published: Mon, September 21 2020. 23:14 IST

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