An important decision has been taken in the meeting of the Goods and Services Tax (GST) Council today i.e. on Monday. According to sources, it has been decided that the Compensation Cess on luxury and many other items will be extended from June 2022. This decision has been taken to protect the states from harm.

Significantly, only 20 states and one union territory have accepted the option of the central government for compensation. Most states ruled by the Congress and other opposition parties have turned down the Center’s offer. The Center had assured that the compensation cess on luxury and many other items would be extended beyond 2022 to repay this borrowing. According to the rule, this was to take only five years after the GST came into force.

States are demanding from the Central Government to give the outstanding compensation of GST of about Rs 2.35 lakh crore. In return, the Center has given them two options to borrow. But the states are divided about this offer of the Center.

States owe GST compensation of about Rs 2.35 lakh crore, but the math of the central government is that out of this, the loss of about Rs 97,000 crore is due to the implementation of GST, the remaining revenue loss of about 1.38 lakh crore corona epidemic. And is due to lockdown.

In August, the central government gave the states two options to deal with this crisis. The first option was that they borrow 97,000 crore rupees from a special window, which will be arranged by the Reserve Bank. Another option is to borrow the entire amount of Rs 2.35 lakh crore.

States opposing the proposal of the Center include Delhi, Kerala, West Bengal, Telangana, Chhattisgarh, Tamil Nadu. He has written a letter to the central government against this. He says that according to the constitution amendment that brought GST, the central government is obliged to give compensation to the states.

If voting is done on this issue, then a lot will depend on what attitude the non-BJP ruled states like Odisha and Andhra Pradesh take. According to the rule, the consent of at least 20 states is necessary to pass any kind of proposal.

News Source: Livemint

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