2-year wait for States not opting for GST compensation formula
   Date :22-Sep-2020

GST _1  H x W:
 
 
NEW DELHI ;
 
STATES which failed to submit their options before the GST Council meeting in October will have to wait for at least two years to get compensation on Goods and Services Tax collection shortfall expected during the transition period, Finance Ministry sources said on Monday.
 
The sources said that such States will have to wait till June 2022 to get compensation dues, subject to the condition that the GST Council extends the cess collection period beyond 2022. This is so because the Council is expected to adopt one of the two options given by the Centre to meet the GST compensation needs of the States this year. The States which decide against operationalisation of the new GST compensation formula will get their dues only to the extent of compensation cess collected in FY21 and distributed in proportion among all States and Union Territories.
 
 
The balance shortfall will only be met from the collection of GST compensation cess beyond the five-year transition period that ends in June 2022. This will be subject to GST Council approval to the extension of compensation cess. The GST Council, in its 41st meeting on August 27, 2020, had decided to give its member-States two borrowing options to meet their compensation shortfall and a response time of 7 working days from the formal receipt of the detailed proposal on the options by email. Almost 15 States had submitted their options by September 15 and more have joined since.