InvestorQ : What was the outcome of the GST Council meeting on 05 October chaired by the Finance Minister?
Tisha Malhotra made post

What was the outcome of the GST Council meeting on 05 October chaired by the Finance Minister?

Answer
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Aashna Tripathi answered.
2 weeks ago


The outcome was that there was no real outcome with the GST states being still divided into the states that are willing to accept the centre’s borrowing model and around 10 states that are unwilling to buy this model offered by the government.

The meeting chaired by Nirmala Sitharaman generated more heat than light because while 21 states were open to the idea of using the RBI borrowing window of Rs.1.10 trillion, 10 states opposed that idea.

The original window offered to the states was a limit of Rs.97,000 crore which was subsequently hiked to Rs.110,000 crore. However, the finance minister of 10 states were clear that the centre will have to step in and pay the dues to the states as committed.

We may see a resolution only in the next meeting of the GST Council scheduled on October 12. State Finance Ministers like Isaac Thomas of Kerala had asked for 4-5 days for internal debate but Nirmala Sitharaman has given them time till October 12 to hammer out a resolution to the deadlock.

Even as states have expressed concerns that non-BJP states were being discriminated against, Nirmala Sitharaman sought to assuage the states and clarified that no state would be denied compensation, irrespective of their choice; to accept or not to accept.

To ease the liquidity burden, as a stop-gap arrangement central government will distribute Rs.20,000 crore collected via compensation cess this year to the states with immediate effect. It does look like there will be no easy resolution for the GST compensation issue.