The Center and the States face each other in terms of compensation for deficit in GST

Mumbai, Ta. 28 August 2020, Friday

The central and state governments are almost at loggerheads over the issue of Goods and Services Tax (GST) rebates. It has been alleged by some states that the central government is trying to press our noses.

At the GST Council meeting on Thursday, the Center discussed with the Reserve Bank the need for the states to provide a special window at a lower interest rate to cover a deficit of Rs 2,000 crore or a full reduction of Rs 2,000 crore in GST returns in the current financial year.

Due to Kovid-18, the revenue from GST of the Center and the states has come down drastically. The Center is bound to compensate the states for the shortfall and it should raise money from the market and pay compensation to the states, said Chhattisgarh Finance Minister T.K. S. Said the lion god.

The Center is constitutionally responsible for paying compensation, he claimed.

The option of taking a loan from the Reserve Bank will not work for Delhi as it is not a full-fledged state and does not have the authority to take a loan, said Delhi Finance Minister Manish Sisodia. The Center is running away from its responsibility. A similar view was expressed by Puducherry.

BJP-ruled states like Karnataka have also argued that the Center should raise money from the market to pay GST compensation.

It may be mentioned here that the central government is not in a position to pay compensation to the states following the lockdown imposed due to Corona and the consequent drastic reduction in revenue through the states and the Center.