GST Council meet Highlights: FM Sitharaman says no consensus again on states’ compensation cess

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Updated: October 12, 2020 10:26:52 pm

GST Council meeting Highlights: The Centre and states met last Monday but could not reach a consensus on the issue of borrowing to make up for compensation shortfall.

Finance Minister Nirmala Sitharaman

GST Council meeting Highlights: Finance Minister Nirmala Sitharaman today said that the GST Council meeting held today ended without a consensus between the Centre and a few states. FM Sitharaman added that the Centre has issued a borrowing calendar, and if it goes beyond that to borrow, the G-Sec deals which are used as a benchmark for every other borrowing will go up, which will increase borrowing costs for states and private sector too. She further said that GST Council has been gracious enough in unanimously agreeing to extend the cess beyond 5 years, to repay the principal and interest of the entire compensation. There is no dispute on this, the entire compensation has to be paid, it will be paid, FM Sitharaman underlined. The Centre and states met last Monday but could not reach a consensus on the issue of borrowing to make up for compensation shortfall. Further, it was decided to meet again on 12 October. 

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Highlights

    22:14 (IST)12 Oct 2020
    No dispute in extending levy of compensation cess

    GST Council has been gracious enough in unanimously agreeing to extend the cess beyond 5 years, to repay the principal and interest of the entire compensation. There is no dispute on this, the entire compensation has to be paid, it will be paid: FM Sitharaman

    22:00 (IST)12 Oct 2020
    Borrowing costs for states and private sector may rise if Centre borrows more

    Centre has issued a borrowing calendar, if I go beyond that to borrow, the G-Sec deals which are used as a benchmark for every other borrowing will go up, this will hence increase borrowing costs for states and private sector too: Finance Minister Nirmala Sitharaman

    21:58 (IST)12 Oct 2020
    No consensus on states' compensation cess

    GST Council meeting ended without a conclusion.

    21:53 (IST)12 Oct 2020
    Majority of the states have opted for Option 1

    The majority of the states have opted for Option 1, while other states proposed to decide on the basis of consensus: Nirmala SItharaman

    21:51 (IST)12 Oct 2020
    FM Sitharaman says why Centre cannot borrow more

    If Centre goes beyond the borrowing calendar, G-Sec bond yields may go high: FM Sitharaman

    21:48 (IST)12 Oct 2020
    States welcome 50-year interest-free loan

    All states hailed centre's announcement to provide 50-year interest-free loans to states: FM Sitharaman

    21:46 (IST)12 Oct 2020
    FM Sitharaman begins address

    FM Sitharaman begins press conference on the outcome of the GST Council meeting held today.  

    20:40 (IST)12 Oct 2020
    FM Sitharaman to address media soon

    Finance Minister Sitharaman to soon address media on the outcomes of GST Council meeting held today. The meeting is delayed and still continuing. 

    20:03 (IST)12 Oct 2020
    Pre-Diwali gift for govt employees

    With a view to boost consumer spending, the government announced LTC Cash Voucher Scheme & Special Festival Advance Scheme for the government employees. This will lead to expected demand generation of Rs 36,000 crore & aid employees during festive season: Smriti Irani

    19:46 (IST)12 Oct 2020
    Levy of compensation cess extended beyond five years

    It was annoucned in the last GST Council meeting that the levy of Compensation Cess is to be extended beyond the transition period of five years, that is, beyond June 2022.

    19:37 (IST)12 Oct 2020
    Centre announces to release compensation

    Centre announced to release compensation of Rs 20,000 crore to states towards loss of revenue during 2020-21 and an amount of about Rs 25,000 crore towards IGST of 2017-18 in the last meeting. 

    19:23 (IST)12 Oct 2020
    Press briefing is delayed

    As the GST Council meeting is still in progress, the press briefing is delayed. The briefing will commence after the GST Council meeting gets over, said the Minirty of Finance. 

    19:20 (IST)12 Oct 2020
    Relief for small taxpayers in last meeting

    Small taxpayers got some reason to cheer after the outcomes of the GST Council meeting was announced. It had been decided that small taxpayers will not have to file monthly returns and their compliance to provide HSN details for B2B transactions are also limited to 4 digits.

    19:13 (IST)12 Oct 2020
    Finance secretary clarifies law on compensation cess

    The decision is to be made is on the extent of borrowing and on the options given by states, said FM Sitharaman. While some question arose on the issue of law on compensation cess, the finance secretary clarified that the law requires compensation to be paid and the levy of compensation has been extended beyond 2022. Hence, the compensation gap remaining in 2022 will be paid and the question of law will be addressed.

    19:07 (IST)12 Oct 2020
    Non-BJP ruled states are in disagreement with Centre

    Non-BJP ruled states are in disagreement with the Centre on the compensation issue. States were earlier given seven days’ time to think and respond over the proposal but the opposition-ruled states were in disagreement.

    18:57 (IST)12 Oct 2020
    It is unfair and unjust to ask state governments to borrow money

    Former Minister of Finance P Chidambaram had said that it is unfair and unjust to ask state governments to borrow the money and the states must stand firm at the next meeting on 12 October. The liability to provide the GST compensation to the full extent falls on the central government thus the onus of finding the resources also falls on the central government, P Chidambaram had added in a tweet. The former finance minister had also complimented the 9-10 states that stood firm and rejected the two options given by the central government to bridge the gap in the GST compensation cess.

    18:51 (IST)12 Oct 2020
    Varied paths of states and Centre

    FM Sitharaman to begin press conference soon. All eyes are glued to the outcome to know whether the states and Centre came to a conclusion in today's meeting.  

    18:46 (IST)12 Oct 2020
    All states to get compensation cess

    FM Sitharaman earlier said that even if the states do not choose either of the two borrowing options, the Centre will find some way to provide them the compensation dues.

    18:40 (IST)12 Oct 2020
    Interest-free loans to states to infuse demand, generate employment, enhance economic growth

    Decision to provide Rs 12,000 crore as 50 year interest-free loan to the States for capital expenditure will not only give filip to ongoing capital projects but also infuse demand, generate employment & enhance economic growth: Cabinet Minister Smriti Irani

    18:38 (IST)12 Oct 2020
    GST Council meets for the third time over compensation cess issue

    It is for the first time when the GST Council discussed about the compensation cess to compensate shortfall. Earlier, the Centre had given two borrowing options to states. 

    18:23 (IST)12 Oct 2020
    Centre, states divided on compensation cess issue

    About 10 states want a group of ministers (GoM) to review the proposals or get the council to consider a third option that involves the Centre and states sharing the burden of the borrowing proposed to bridge the deficit.

    18:17 (IST)12 Oct 2020
    50-year interest-free loans for states

    FM Sitharaman announced 50-year interest-free loans of Rs 1,600 crore for north-eastern states and Rs 900 crore of such loans for Himachal Pradesh and Uttarakhand. The amount has to be spent by 31 march 2021. Other states will also get Rs 7,500 crore loans in proportion to their share in Finance Commission evolution.

    18:08 (IST)12 Oct 2020
    FM Sitharaman today announced LTC cash voucher to boost demand

    Earlier today, Finance Minister Nirmala Sitharaman announced that government employees can avail cash voucher for LTC if they can’t travel due to pandemic.

    18:06 (IST)12 Oct 2020
    Centre and states could not reach on consensus in last meeting

    No consensus as drawn in the last meeting on the issue of borrowing to make up for compensation shortfall. 

    17:59 (IST)12 Oct 2020
    FM Sitharaman to address media soon

    Finance Minister Nirmala Sitharaman will soon address media on the outcomes of the GST Council meeting at 7 PM.

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