The Goods & Services Tax (GST) Council is likely to meet next month to discuss the compensation issue.
“Meeting on compensation is expected in July. States may raise the issue related to borrowing to meet the current fiscal’s compensation shortfall,” a senior Government official told BusinessLine.
At the council meeting on May 28, it was decided to borrow ₹1.58-lakh crore during the current fiscal.
On May 28, Finance Minister Nirmala Sitharaman announced that there will be a special meeting of the council on compensation. She had said: “We are in the last of 5 years of 14 percent compensation. Even from last year, there has been a worry if there will be an opportunity to extend it beyond July 2022. So, I have assured the members that there will be a special session only to discuss that one agenda: how the compensation cess will collected, how long it will be collected and how much will be collected beyond July 2022.”
Compensation is being provided to the States for the loss of revenue arising on account of the implementation of the GST. For this, FY2015-16 has been taken as base year while the growth rate of revenue for a State is assumed to be 14 percent per annum. For the payment of compensation, cess is being levied on certain goods in the 28 percent bracket.