At the 43rd Goods and Services Tax Council meeting on Friday, differences erupted between Opposition-ruled states and the Centre as the discussion on extending more exemption for Covid-related items such as vaccinations and medical supplies came to a halt. It has now been sent to a Ministerial Working Group, which will make recommendations by June 8.
The Council, which will meet after October 2020, will debate compensation payments, for which states have expressed worry about the revenue growth assumption of 7%. A special meeting will be scheduled soon to examine compensation concerns and the possibility of extending the guaranteed compensation period beyond June 2022. “It is one thing to rush to say — do this, it will benefit the common man. But when the technical, fitment and law committees go into the details, you realise that that could have collateral impact on many others. I am not talking about the revenue generation aspect, but how many other items will get included in it as a result of which, how you are going to implement it,” Finance Minister Nirmala Sitharaman said.
States have demanded concessions and a zero rating for Covid-related relief goods.
The Council also addressed the forecasts made to close the pay gap this fiscal year. Based on the premise that revenue growth will be 7%, an estimated amount of Rs 1.58 lakh crore is anticipated to be borrowed in back-to-back loans to meet the guaranteed compensation requirement for states under GST. This year, Sitharaman stated, the same formula will be used as last year.
However, three state finance ministers informed The Indian Express that there is no consensus on these estimates and that they will discuss it at a special conference arranged for this purpose.