There is no move in the offing to consult the Attorney General (AG) again on the matter of the Union government’s obligation to compensate states for their Goods and Services Tax (GST) revenue losses because of the Covid-19 pandemic, a government official said, requesting anonymity.
“Certain sections of the media are inaccurately claiming that a parliamentary panel discussed consulting the Attorney General again on the issue of GST compensation to states,” the official said.
The official said the panel on Friday did discuss audit-related matters pertaining to the Mach 2018 report of the Comptroller and Auditor General of India (CAG) with Union finance ministry officials, but there was no discussion on the GST compensation issue.
The AG had already opined that the Union was not obligated to compensate state for the loss of revenue collection under the GST laws, the official said. “According the AG, the GST council has to find ways to meet the shortfall in compensation, not the Central government,” the official said.
The Union government has given two borrowing options to states to meet their revenue shortfall of about Rs 2.35 lakh crore in the current financial year. Under the first option, states will not have to pay either principle or interest if they borrow only Rs 97,000 crore to meet the GST revenue shortfall because of implementation issues, but they will have to bear significant interest costs if they choose the larger borrowing option of Rs 2.35 lakh crore that includes revenue shortfall due to the Covid-19 pandemic.
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