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GST Council will meet on September 17. This will be the first meeting in person after a gap of almost 16 months and five sessions.
“Finance Minister Smt @nsitharaman will chair the 45th meeting of the GST COUNCIL on September 17 at Lucknow,” a tweet from the Finance Ministry said. The Council is scheduled to meet at least once in three months. The last meeting took place on June 12 with a single agenda of relief on Covid-related items. It was also decided that a special session will take place on the compensation mechanism. The Council had a physical meeting last time on March 14, 2020.
Key issues
One of the key issues expected to be discussed on compensation mechanism is the imposition of compensation cess has already been extended beyond June next year. Now the issue is about till when the compensation is to be paid.
Since the GST collection was affected by the pandemic, based on the deliberations in the GST Council for FY 2021, the Centre had borrowed ₹1.1 lakh crore and for FY 2022, ₹75,000 crore (out of ₹ 1.59 lakh crore) under a special window and passed it on to the States as back-to-back loan to help them meet the resource gap due to short-release of compensation on account of inadequate balance in the Compensation Fund. , A cess will continue to be levied for the borrowing raised so far until the borrowed amount is repaid.
Compensation to States
However, the big issue is when the compensation is to be paid which is likely to be discussed in the Lucknow meeting. Though some States are seeking payment of compensation beyond June 2022, the Centre indicates that this may not be possible.
GST collection this year has been on expected lines. After a record ₹1.40 lakh crore in April, collection dropped to ₹1.02 lakh crore in May and ₹93,000 crore in June. It jumped to ₹1.16 lakh crore in July and ₹1.12 lakh crore in August.
Finance Minister Nirmala Sitahraman has already said that collection this year has improved substantially, and as a result, there are chances that the government may be able to pay compensation to States. On extending compensation beyond July 2022, she said the GST Council will decide on the issue.
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