Compensation cess under the Goods and Services Tax regime will be collected till March 2026, but the proceeds after June 2022 will not go to the states.Finance Minister Nirmala Sitharaman said the proceeds from the cess collected over a period of five years as agreed would be used to pay interest and principal on loans that the Center has raised to meet the shortfall during the Covid-19 pandemic. borrowed for.“From June 2022 to March 2026, the cess collected will be used only to pay interest and principal on the amount borrowed. The GST (Compensation to States) Act says that the compensation period will be five years and it will end in June 2022," Sitharaman told reporters after the GST Council meeting held in Lucknow on Friday, which was the first face-to-face meeting . Since the epidemic came in March last year. The move has angered the states and they have said that they expect to be compensated for any revenue loss they may face after June 2022. The deficit is mounting as collections have fallen short of the original estimates that were built around the promise that states would receive an annual revenue growth of 14 per cent with the base year set at 2015-16. Differences on the Compensation Cess are expected to erupt in the next meetings of the Council.The Center had taken a loan of about Rs 1.10 lakh crore in the year ended March 31 this year and gave it to the states. It has also provided cash compensation of Rs 75,000 crore in the current financial year. Additional borrowing is planned for the end of this year, with an estimated shortfall of about Rs 1.58 lakh crore in GST revenue.Chhattisgarh Congress leader T.S. Singh Deo told The Telegraph that "the states surrendered their taxation rights on the assurance that revenue would boom. However, if it fell, the compensation period would have to be extended. A resolution should be passed for"If the Center considers that the compensation cess will have to be deposited by April 2026, then by their own estimates, the economy will not pick up and the revenue generation will be lower than projected," he said.The minister gave a clear indication that the Center is not inclined to consider the demand of some states for an extension of five years.Sitharaman said the GST regime was originally based on a revenue-neutral tax rate of 15.5 per cent. However, due to changes made in tax rates on various goods and services over the years, the actual GST revenue has been going down with the effective tax rate falling to 11.6 per cent.“A detailed presentation was given on various ways of revenue generation aspects, reforms in inverted duty structure, and revenue neutral position which was 15.5 per cent at the time of introduction of GST, which has steadily come down to 11.6 per cent. ," He said.panels made The Council decided to form two Group of Ministers (GoMs) who have been asked to recommend measures to boost revenue collection and submit a report within two months. The former has been tasked with reviewing tax rate rationalization issues to correct anomalies in the rate structure. The second group will examine ways to use technology to improve compliance and monitoring. It said, it will look at e-way bill, FASTag, compliance and structuring schemes to plug the loopholes The compensation cess levied on automobiles, tobacco products and aerated water, over and above the basic GST rate, was to be tapped to cover the shortfall between the states' actual revenue and the 14 per cent annual revenue growth for five years, while He was assured. Adoption of GST In 2020, the Council decided that a compensation cess would be levied to repay the principal amount as well as the interest payable on these borrowings.
No comments:
Post a Comment