Many States are Expected to Apply for an Extension of the GST Compensation Program Beyond 2022.
At the next session of the GST Council, several states are anticipated to bring up the idea of extending the Goods and Services Tax (GST) compensation period by five years, beyond 2022. Several states have criticized the compensation offered for farmers damaged by the recent floods. Kerala, Punjab, and Chhattisgarh are among them. The USDA has stated that the revenue of producing states had been harmed by the Covid-19 pandemic, and it is seeking compensation at a rate of 14% above its FY16 base year projection.
Until 2026, the compensation cess will be used to repay back-to-back loans of $2.69 trillion made in FY21 and FY22 to states to make up for the disparity, according to Finance Minister Nirmala Sitharaman. The compensation for revenue loss due to the introduction of GST was extended by five years, until July 2022, according to the constitutional amendment implemented to implement it. The deficit is estimated at 14% annual growth in state GST collections over 2015-16 as the starting year. “The subject isn’t closed… we’ll discuss it again. There should be an extension of five years; states’ revenues have been badly damaged,” Kerala’s finance minister KN Balagopal said about the issue.
The finance minister of the Indian state of Punjab, Manpreet Singh Badal, asked for a three-year extension in the compensation window on the basis that a long time would give states more chance to balance revenue shortfalls from compensation and recover from the epidemic’s effects. “There has been no indication in Council; there was a debate during which many states argued for an extension by 3-5 years,” said Chhattisgarh commercial taxes minister TS Singh. The government is continuing to prepare for the next five years. The country’s president, Mamnoon Hussain, met with finance minister Ishaq Dar on Tuesday to discuss the budget speech and economic issues faced by Pakistan. According to Finance Minister Ishaq Dar, his country will make a “historic” debt reduction target of $ 30 billion in 2020-21 as part of efforts to achieve macroeconomic stability before the end of Malabar naval exercises in 2021. A senior official said that certain BJP-governed states had also requested an extension of the compensation period owing to pandemic revenue losses affecting all states.
“Other alternatives of compensation should also be considered, such as sharing of the tax base,” an official from Tamil Nadu added. The Center made a comprehensive presentation to states last week showing the government’s revenue situation, increased GST receipts over the previous few months, and anticipated growth in revenues for the remainder of this fiscal year. “ Explore our site for more finance updates.
