Ex-FM Chidambaram advises states to reject Centre's two 'borrowing' options for GST dues

A day after Centre offered two options to states for borrowing in the 41st GST Council, ex-Finance Minister P Chidambaram, on Friday, advised states to reject both options and insist Centre find the resources and provide the money. Terming the options a 'gross violation', he said that the Centre was passing the buck of financial burden to the States. Congress chief Sonia Gandhi had met with seven non-NDA CMs on the issue, resolving to fight the Centre jointly.

Chidambaram on Centre's GST options 

GST Council rules out hike in taxes amid COVID-19 as Centre places 2 options to states

Centre places 2 options before states

At the 41st GST Council meeting, the Centre estimated that the compensation requirement by the states in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Revenue Secretary Ajay Bhushan Pandey said of this, Rs 97,000 crore is on account of GST shortfall, while the rest is due to the impact of COVID-19 on the economy. Centre has reportedly refused to pay mandatory GST compensation of 14% for the current year due to COVID-19 pandemic.  Finance Minister Nirmala Sitharaman stated that the economy is facing an extraordinary 'Act of God' situation, which may result in economic contraction. 

• To alleviate state's GST stress, Revenue Secretary Ajay Bhushan Pandey said a special window can be provided to the states at a reasonable interest rate for the borrowing of Rs 97,000 crore - the amount can be repaid after five years (of GST implementation) ending 2022 from cess collection.
• The second option before the states is to borrow the entire Rs 2.35 lakh crore shortfall under the special window. "States have been given seven days' time to think over the proposal," Pandey said.

Rajasthan govt asks Centre to release pending GST compensation worth Rs 6,690 cr

7 state CMs band together over GST issues

On Wednesday, chief ministers of even non-NDA ruled states vowed to put up a united fight over the issue of non-payment of GST compensation to states by the Centre and to protect the federal structure. At a meeting called by Congress president Sonia Gandhi, the chief ministers of Maharashtra, Jharkhand, Punjab, Rajasthan, Chhattisgarh and Puducherry and West Bengal called for joint action on the GST issue and decided to collectively petition the prime minister at the earliest. All the chief ministers rallied behind Sonia Gandhi and accused the Centre of squeezing their funds in COVID times - with Thackeray saying, "We should decide whether we have to fight or fear". 

Gujarat govt seeks Rs 12,000-cr GST compensation from Centre

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