The 41st GST Council meeting was held under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman via video conferencing on the 27th of August, 2020. Shri Anurag Thakur and Finance Ministers of States & UTs and Senior officers from Union Government & States were present in the meeting.
What were we expecting from 41st GST Council Meeting?
• Issues such as compensation to states and therefore GST rates revision.
• Issues such as meeting compensation gap to states/revenue shortfall.
• GST rate cut for Two-wheeler industry
• Finance Ministry to examine if the sin tax applies to soft drinks
Highlights of 41st GST Council Meeting:
1. States were given two options to make up for their revenue shortfall amid the Covid-19 pandemic.
• To provide a special borrowing window to states, in consultation with the RBI, to provide Rs 97,000 crore at a "reasonable" interest rate, and this money can then be repaid after 5 years by extending cess collections.
• To meet the entire GST compensation gap of Rs 2.35 lakh crore this year itself after consulting with the RBI
2. States will also be given a further relaxation in FRBM of 0.5% points for market borrowing.
3. States Seek Seven Days To Consider Cess Option
4. The Attorney General is of the view that compensation needs to be paid to states for five years. But this compensation gap has to be met from the levy of cess only.
6. Data analysis:
About Rs 3 lakh crore would be the need for compensation to be paid to states while compensation cess collected would be Rs 65,000 crore. April-July compensation is around Rs 1.50 lakh crore
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