Hon’ble Finance Minister holds 43rd GST Council Meeting.
The Hon’ble Finance Minister Nirmala Sitharaman held the 43rd GST Council meeting on 12th October, 2020 to decide on the issue of borrowing for plugging states compensation gap.
We bring you key highlights and outcomes from the meeting.
> The the cess collection is inadequate shortfall in compensation. Hence, the shortfall has to be met by borrowing.
> The Centre has issued a borrowing calendar, if it go beyond that to borrow, the G-Sec deals which are used as benchmark for every other borrowing will go up, this will hence increase borrowing costs for states & the private sector.
> No consensus has been arrived on the options presented to states in meeting GST compensation shortfall.
> The GST Council has unanimously agreed to extend the cess beyond 5 years, to repay the principal and interest of the entire compensation.
> The States who wish to opt for the borrowing option both interest and principal for the borrowing will be paid out of compensation cess collected from July 2022, it will be paid neither from Central nor from state resources, it will be done by a third party.
> When states approach the Centre,a working will be done to estimate the shortfall each state would face, the compensation which would become available to them, working along with the RBI, the Centre will ensure that they get a good interest rate.
Vox Analytica GST
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