The Center has said that the GST collection has decreased by at least Rs 2.35 lakh in the financial year 2020-21.
The dispute between the states and the Center about GST is increasing. On Thursday, no decision could be taken in the meeting of the GST Council on the question of GST compensation of states. The financial condition of the states is bad and they have said that the Central Government should compensate for the deficiency in their collections. But the Center has clearly said that it does not have money for compensation. It cannot compensate the deficit of the states.
States said, they can borrow but the Center can guarantee
The Center has said that the GST collection has decreased by at least Rs 2.35 lakh in the financial year 2020-21. States are given two options. The first option is that the Center take money from the market and give money to the states. Another option is for the state to borrow from the RBI. The states say that they can borrow but this will have to be guaranteed by the central government. The question is whether the state will lend directly to RBI or not? Secondly, do not even know what its process will be? What will be the terms of RBI?
The financial situation of Kovid-19 states has deteriorated significantly. Due to the stagnation of economic activities, there has been a huge reduction in the GST collection of the states and to compensate for this, they may need from 3.1 to 3.6 lakh crores. Apart from taking additional loans and extending the cess period, they have limited options left.
26 thousand crores needed every month
This estimate can be made by giving the current trend of GST collection. At the moment, the GST collection is only 65 percent. At this time, the states will need 26 thousand crore rupees as GST compensation every month. Although the Center has at this time taken forward the improvement in GST rates and inverted duty structure, they say that they will not approve this given the reduction in GST income due to Kovid-19. With this, demand has been raised by all industries to cut GST.